Question
Zadie can buy two kinds of goods, food and clothing. She earns 400 per week. Food items cost 4 each, and items of clothing cost
Zadie can buy two kinds of goods, food and clothing. She earns 400 per week. Food items cost 4 each, and items of clothing cost 20 each.
a.Draw a diagram showing her budget constraint and explain clearly what this constraint represents in terms of feasible consumption of food (on the x axis) and clothing (on the y axis).
On a copy of the diagram drawn for Question 1a, add an indifference map for Zadie comprising at least three indifference curves based on the assumption that her marginal rate of substitution of food for clothing is diminishing and show on this diagram the feasible consumption level of food and clothing that maximises her utility
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