a. Sketch a budget line for a Kenyan household that spends its income on only two goods:

food and education. Identify the affordable and unaffordable combinations of the two goods.

b. Sketch a second budget line to show how a rise in the price of food changes the affordable and unaffordable combinations of food and education. Describe how the household’s consumption possibilities change.

Food prices in Kenya are among the highest in the world. An average urban family in Kenya spends almost half of its income on food, which heavily drains expenditure that could have otherwise been diverted toward education, clothing, and investment.