Question
solve this question, please 22)Mary has S5O income to spend on two consumption goods: cola and nuts. The price for ends bottle of cola is
solve this question, please
22)Mary has S5O income to spend on two consumption goods: cola and nuts. The price for ends bottle of cola is S5. The price for each box of nuts is SIO. Mary is consuming 4 bottles of cold and 3 boxes of nuts now (bundle A).
a)Draw Mary's budget line (BLI) with the unit of Cola in x-axis (horizontal axis) and the unit of nuts in y-axis (vertical axis) below. Mark bundle A on the same graph.
b)Suppose Mary's income increases from $50 to $100 while the price for both goods do not change. Draw the new budget line below and mark bundle A on the same graph. Is bundle A lying inside or outside the new budget line? Is bundle A affordablewith regard tothe new budget line?
c)Suppose instead Mary's income is still $50 and the price for each box of nuts is still $10.However, the price for each bottle of cola increases from $S to $10. Draw the new budget line below and mark bundle A on the same graph. Is bundle A lying inside or outside the new budget line? Is bundle A affordablewith regard tothe new budget line?
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