Jonathan Livingstone Yuppie is a prosperous lawyer. He has, in his own words, “outgrown those confining two-commodity limits.” Jonathan consumes three goods, unblended Scotch whiskey, designer tennis shoes, and meals in French gourmet restaurants. The price of Jonathan’s brand of whiskey is $20 per bottle, the price of designer tennis shoes is $80 per pair, and the price of gourmet restaurant meals is $50 per meal. After he has paid his taxes and alimony, Jonathan has $400 a week to spend.
(a) Write down a budget equation for Jonathan, where W stands for the number of bottles of whiskey, T stands for the number of pairs of tennis shoes, and M for the number of gourmet restaurant meals that he consumes.
(b) Draw a three-dimensional diagram to show his budget set. Label the intersections of the budget set with each axis.
(c) Suppose that he determines that he will buy one pair of designer tennis shoes per week. What equation must be satisfied by the combinations of restaurant meals and whiskey that he could afford?