Question
Suppose Lisa initially has income of $60, the price of pizza (pZ) is $1.00 per slice, and the price of burritos (pB) is $4.00 per
Suppose Lisa initially has income of
$60,
the price of pizza
(pZ)
is
$1.00
per slice, and the price of burritos
(pB)
is
$4.00
per burrito. Her budget line
(L1)
is illustrated in the figure to the right.Part 2Suppose Lisa's budget and the price of pizza double, but the price of burritos remains constant. Show how her budget constraint and opportunity set changes. Is Lisa necessarily better off than before these changes?
(Hint:
What happens to the intercepts of the budget line?)Part 31.) Using the line drawing
tool,
graph Lisa's new budget constraint. Label this line
'L2.'
2.) Using the triangle drawing
tool,
shade in Lisa's opportunity set. Label this 'OS.'Part 4Carefully follow the instructions above, and only draw the required objects.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started