Write down the budget constraint in terms of ax 1+ bx 2= c where x 1 is
Question:
Write down the budget constraint in terms of ax1+bx2=c where x1 is quantity of bread and x2
is quantity of wine. (Since this is a linear equation, you could scale a, b, and c by an arbitrary scalar. In this and subsequent questions, just let c be the total budget in dollars.) Find the values of a, b, c
Suppose the price of wine drops from $2 to $1 when a new source of grapes is found in Tashkent. Write down the new budget constraint. a=, b=, c=
Use the original prices ($2 for both bread and wine), but suppose that Rumi's income increases from $100 to $200 when he earns the patronage of the shah. Write down the new budget constraint. a=, b=, c=
Again return to the first budget constraint. Now suppose the government wants consumers to conserve bread, so it changes the price of bread to $4 for each purchase of of bread above 25. (For 25 or less units of bread, the original price of $2 is used.)
Draw the budget constraint. What is the area under the new budget constraint?CAN YOU PLEASE ANSWER ONLY WHAT IS THE AREA UNDER THE NEW BUDGET CONSTRAINT,A NUMERICAL VALUE?
Thanks.