Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Draw a budget constraint and identify an opportunity set when given a budget and price of two goods. Identify whether a combination of goods falls

image text in transcribed
  • Draw a budget constraint and identify an opportunity set when given a budget and price of two goods.
  • Identify whether a combination of goods falls within an individual's opportunity set.
  • Identify the opportunity cost of one good in a two good budget constraint module.

For questions 1-4 consider the following scenario:

Mary is shopping for new clothes and has $200 to spend. A pair of pants costs $40 and a top costs $20.

Question 2

Determine if each of the following combinations are in Mary's opportunity set or not.

Three pairs of pants and two tops.

(a)In Mary's opportunity set

(b)Not in Mary's opportunity set

One pair of pants and eight tops.

(a)In Mary's opportunity set

(b)Not in Mary's opportunity set

Four pairs of pants and three tops

(a)In Mary's opportunity set

(b)Not in Mary's opportunity set

Question 3

Given Mary is only going to buy pants and tops, what is the opportunity cost of one pair of pants?

Question 4

Suppose there is a half off sale cutting the price of pants and tops in half.Knowing this, Mary also decides to cut her budget in half. What has happened to her opportunity set, does it get larger, smaller, or stay the same? Explain your answer.

image text in transcribed
Question 1 4 pts Draw the budget constraint to represent Mary's budget and the prices of pants and tops. Indicate the opportunity set on the graph. You may use the blank copy provided and ll in the blanks or draw your own from scratch. You may draw a digital version or you may do it by hand and scan/take a photo of your image and upload it here. Pants 10 Tops

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Bank Management

Authors: Timothy W Koch, Mark S Cracolice

7th Edition

1111804265, 9781111804268

More Books

Students also viewed these Economics questions

Question

Question 14: Good governance - has a value in the market place?

Answered: 1 week ago