Question
Suppose Kenji has a yearly budget of $120 to spend on oat milk and peanut butter. Oat milk is priced at $2 per quart, and
Suppose Kenji has a yearly budget of $120 to spend on oat milk and peanut butter. Oat milk is priced at $2 per quart, and peanut butter is priced at $6 per jar.
If Kenji spends his entire $120 on oat milk, he can buy
quarts of oat milk. If he spends his entire $120 on peanut butter, he can buy
jars of peanut butter.
Use the blue line (circle symbol) to plot Kenji's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of oat milk and peanut butter that are affordable for Kenji. Finally, place the black point (plus symbol) on the point on Kenji's budget constraint that corresponds to a scenario in which Kenji spends $60 on each good.
Note: Dashed drop lines will automatically extend to both axes.
120 O 110 100 BC, ($120) 90 80 70 Affordable Region 60 PEANUT BUTTER (Jars) 50 $60 on Each 40 30 A 20 BC, ($240) 10 0 10 20 30 40 50 60 70 80 90 100 110 120 OAT MILK (Quarts)Step by Step Solution
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