Question
Course: Microeconomics - Consumer Theory - Non-constant Prices A person has a monthly rental of 1 million pesos ; he consumes 2 goods: entertainment (E)
Course: Microeconomics - Consumer Theory - Non-constant Prices A person has a monthly rental of 1 million pesos; he consumes 2 goods: entertainment (E) (measured in hours per month) and food (F) (measured in kilos per month). The prices are: PE = $10,000 hours/month and PF = $5,000 kilos/month. 1.- Suppose that for the volume of purchases exceeding 100 kilos per month, the supermarket discounts 20%. Draw the budget constraint. 2. What is the opportunity cost of food? 3. Answer the previous question, assuming now that when food consumption exceeds 100 kilos per month, the supermarket deducts 20% for the total amount purchased.
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