Suppose you get cast on the next season of Project Runway and you are about to begin your first design challenge. Tim Gunn gives you a budget of m = $40 to spend on yards of fabric (x) and spools of thread (y) at Mood (fabric store). The price of a yard of fabric is px and the price of a spool of thread is py.

(a) For the particular Project Runway episode, you must only buy fabrics and thread that cost px = $10 and py = $5, respectively. Graph your budget constraint and be sure to show your calculations

b) Tim Gunn decides to make a twist! You still must only buy fabrics and thread that cost px = $10 and py = $5, but now Tim is giving you $40 worth of fabric for free. Graph your budget constraint and be sure to show your calculations

c)You have made it past the first round of elimination. Now you are back at Mood shopping for fabric and thread for the next challenge. Today, Mood is having a sale on fabric! The price of a spool of thread is still py = $5. The first 3 yards of fabric is $10 per yard, but then each yard purchased after that costs $1 per yard. Graph your budget constraint and be sure to show your calculations.

d)Suppose designers on Project Runway have preferences over fabric and thread that match the utility function u(x, y) = xy Do you expect there to be a unique utility maximizing bundle for parts a-c? Explain your answer about uniqueness for each budget constraint you graphed.

Answer rating: 100% (QA)

Project Runway Economics Fabric Thread Frenzy Lets analyze your Project Runway budget constraints and utility maximization a Baseline Budget Constraint Budget m 40 Fabric price px 10 per yard x Thread ... View the full answer