Question
Q. Rumi has $100 and is deciding how to Spend it on bread and wine. The price of bread is $2 and the price of
Q. Rumi has $100 and is deciding how to Spend it on bread and wine. The price of bread is $2 and the price of wine is $2.(Both goods are infinitely divisible.) Write down the budget constraint in terms of axl + bxz = c, where an is quantity of bread and x2 is quantity of wine. (Since this is a linear equation, you could scale a. b, and c by an arbitrary scalar. In this and subsequent questions, just let 0 be the total budget in dollars.)
a=?; b=?; c=?
Suppose the price of wine drops from $2 to $1 when a new source of grapes is found in Tashkent. Write down the new budget constraint.
a=?; b=; c=?
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