Hanan consumes two fruits: bananas (B) and apples (A). She has decided that her monthly budget for fruit will be 25 KD. Suppose that one banana costs 0.25 KD (250 Fils), while one apple costs 0.10 KD (100 Fils). a. State Hanan’s budget constraint. b. Draw a graph of Hanan’s budget line. Place the number of units of bananas on the vertical axis and the number of units of apples on the horizontal axis. c. Show graphically how Hanan’s budget line changes under the following scenarios: i. If the price of apples increases to 0.20 KD (200 Fils). ii. If the price of bananas decreases to 0.05 KD (50 Fils). iii. If her income increases to 50 KD. iv. If Hanan decides to cut her monthly budget for fruit in half and notices that bananas and apples are on sale for half price.
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Hanan consumes two fruits: bananas (B) and apples (A). She has decided that her monthly budget for fruit will be 25
KD. Suppose that one banana costs 0.25 KD (250 Fils), while one apple costs 0.10 KD (100 Fils).
a. State Hanan’s budget constraint.
b. Draw a graph of Hanan’s budget line. Place the number of units of bananas on the vertical axis and the
number of units of apples on the horizontal axis.
c. Show graphically how Hanan’s budget line changes under the following scenarios:
i. If the price of apples increases to 0.20 KD (200 Fils).
ii. If the price of bananas decreases to 0.05 KD (50 Fils).
iii. If her income increases to 50 KD.
iv. If Hanan decides to cut her monthly budget for fruit in half and notices that bananas and apples are
on sale for half price.
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