Suppose the price of X is $5 and the price of Y is $10 and a hypothetical
Question:
Suppose the price of X is $5 and the price of Y is $10 and a hypothetical household has $500 to spend per month on goods X and Y.
a. Sketch the household budget constraint.
b. Assume that the household splits its income equally between X and Y. Show where the household ends up on the budget constraint.
c. Suppose the household income doubles to $1,000. Sketch the new budget constraint facing the household.
d. Suppose after the change the household spends $200 on Y and $800 on X. Does this imply that X is a normal or an inferior good? What about Y?
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Gabriela Rosalía Castro
I have worked with very different types of students, from little kids to bussines men and women. I have thaught at universities, schools, but mostly in private sessions for specialized purpuses. Sometimes I tutored kids that needed help with their classes at school, some others were high school or college students that needed to prepare for an exam to study abroud. Currently I'm teaching bussiness English for people in bussiness positions that want to improve their skills, and preparing and ex-student to pass a standarized test to study in the UK.
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Related Book For 
Principles Of Economics
ISBN: 9780593183540
10th Edition
Authors: Case, Karl E.;Oster, Sharon M.;Fair, Ray C
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