Question
There are two types of mangoes, that are high-quality mangoes x, and low-quality mangoes X. In Country A, the market price for a kilogram of
There are two types of mangoes, that are high-quality mangoes x, and low-quality mangoes
X. In Country A, the market price for a kilogram of high-quality mangoes is higher than that for a kilogram of low-quality mangoes, that is P>P. Country A does not trade with other countries.
(a) Consumers in Country A would choose between high- and low-quality mangoes
Draw a budget constraint of the consumers in Country A, and optimal choice that these consumers would make. Explain how the consumers in Country A makes a consumption decision, using the diagram.
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