Question
You wake up on the planet Flatz after being abducted for economic research. The Flatzies give you following resources to survive - 10,000 Flats. Flats
You wake up on the planet Flatz after being abducted for economic research. The Flatzies give you following resources to survive - 10,000 Flats. Flats are universally accepted on Flatz for acquiring goods and services. The saddening thing with Flats is that 25% of your Flats vanish at sunrise.
a) Construct graphs of your consumption opportunity set (decision line/budget constraint) for Day 1 to Day 2, and Day 2 to Day 3.
b) If you are offered a return ticket to Earth on Day 3 at a cost of 2500 Flats, what is the maximum amount of Flats you can spend on Day 1 to leave you with enough Flats to purchase the ticket to return home on Day 3?
Show your calculations and construct the graphs showing your consumption allowing you to return home.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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