Question
/Suppose that Anna consumes 2 goods: pizza and apples. Anna has the following data: x1 = the quantity of pizzas, measured in slices per month
/Suppose that Anna consumes 2 goods: pizza and apples. Anna has the following data:
x1 = the quantity of pizzas, measured in slices per month p1 = the price of pizza in $ per slice = $8 / pizza x2 = the quantity of apples, measured in pounds per month
p2 = the price of apples in $ per pound = $2 / pound m = income = $50 / month
Q: What is the opportunity cost of consuming pizza and apples?
/ Suppose that Anna's income falls to $40/month:
Q: What is the maximum amount of apples that Anna can buy?
/Suppose income is now $40/month and that the price of apples falls to $1/pound:
Q: What is the maximum quantity of apples & pizza that Anna can buy and
what is the slope of the budget line?
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