Following exercise is requested: (a) Draw a budget line knowing that: nominal income is $100/week, price of lamb meat (Pm) is $2/kilo and price of housing (Ph) is $20/week. It is also known that ALL INCOME is spent on both goods. b) Assume now that monetary income remains CONSTANT, but price of lamb meat DOUBLES to $4/kilo, while the price of housing DECREASES to $10/week. Draw new budget line.
Following exercise is requested: (a) Draw a budget line knowing that: nominal income is $100/week, price of lamb meat (Pm) is $2/kilo and price of housing (Ph) is $20/week. It is also known that ALL INCOME is spent on both goods. b) Assume now that monetary income remains CONSTANT, but price of lamb meat DOUBLES to $4/kilo, while the price of housing DECREASES to $10/week. Draw new budget line.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 20SQ
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Following exercise is requested:
(a) Draw a budget line knowing that: nominal income is $100/week,
b) Assume now that monetary income remains CONSTANT, but price of lamb meat DOUBLES to $4/kilo, while the price of housing DECREASES to $10/week. Draw new budget line.
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