Suppose you wants to go in for Swimming and GYM sessions during your holiday this Summer. The price of Swimming is $50 per session, and price for GYM is for $30 per session. Suppose you have $3000 available to spend on these two activities during your holiday this Summer. Determine the equation for the consumer’s budget line. Graph the consumer’s opportunity set in a carefully labeled diagram. Calculate the Market rate of substitution (i.e. the rate at which the market trades Swimming and GYM)? How will the consumer’s opportunity set (budget line) changes when price of Swimming decreases to $40? Show your answer on your graph in part b above (use colored ink). How does decrease (to from $50 to $40) affects Market rate of substitution?
Suppose you wants to go in for Swimming and GYM sessions during your holiday this Summer. The price of Swimming is $50 per session, and price for GYM is for $30 per session. Suppose you have $3000 available to spend on these two activities during your holiday this Summer. Determine the equation for the consumer’s budget line. Graph the consumer’s opportunity set in a carefully labeled diagram. Calculate the Market rate of substitution (i.e. the rate at which the market trades Swimming and GYM)? How will the consumer’s opportunity set (budget line) changes when price of Swimming decreases to $40? Show your answer on your graph in part b above (use colored ink). How does decrease (to from $50 to $40) affects Market rate of substitution?
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 6QFR
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Suppose you wants to go in for Swimming and GYM sessions during your holiday this Summer. The price of Swimming is $50 per session, and price for GYM is for $30 per session. Suppose you have $3000 available to spend on these two activities during your holiday this Summer.
- Determine the equation for the consumer’s budget line.
- Graph the consumer’s opportunity set in a carefully labeled diagram.
- Calculate the Market rate of substitution (i.e. the rate at which the market trades Swimming and GYM)?
- How will the consumer’s opportunity set (budget line) changes when price of Swimming decreases to $40? Show your answer on your graph in part b above (use colored ink).
- How does decrease (to from $50 to $40) affects Market rate of substitution?
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