To make sure he has enough energy for the teaching, Ernie spares $60 every week to spend on Blue Bull and Gigantic energy drinks. A can of Blue Bull costs $2, and a can of Gigantic costs $3. Assume that fractions of a can are allowed. (a) Draw Ernie’s budget line, measuring Blue Bull on the horizontal axis and Gigantic on the vertical axis. (b) How many cans of Gigantic can Ernie afford if he buys 15 cans of Blue Bull? (c) What is the maximum number of cans of Blue Bull Ernie can afford?
To make sure he has enough energy for the teaching, Ernie spares $60 every week to
spend on Blue Bull and Gigantic energy drinks. A can of Blue Bull costs $2, and a can
of Gigantic costs $3. Assume that fractions of a can are allowed.
(a) Draw Ernie’s budget line, measuring Blue Bull on the horizontal axis and Gigantic
on the vertical axis.
(b) How many cans of Gigantic can Ernie afford if he buys 15 cans of Blue Bull?
(c) What is the maximum number of cans of Blue Bull Ernie can afford?
(d) What is the slope of the budget line? Be sure to include the sign. Explain in words
what this slope measures.
(e) Denote the number of cans of Blue Bull by qb and that of Gigantic by qg. Write
down an equation capturing Ernie’s budget constraint. How would the equation for
a budget line be different?
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