The Japanese Ministry of Internal Affairs and Com mu ni cations collects data on the prices of goods and services in the Ku - area of Tokyo, as well as data on the average Japanese household€™s monthly income. The accompanying table shows some of this data. (¥ denotes the Japanese currency the yen.)

a. For each of the two years for which you have data, what is the maximum number of packs of eggs that an average Japanese household could have consumed each month? The maximum number of 100-gram portions of tuna? In one diagram, draw the average Japanese household's budget line in 2003 and in 2005.
b. Calculate the relative price of eggs in terms of tuna for each year. Use the relative price rule to determine how the average household's consumption of eggs and tuna would have changed between 2003 and 2005.

Transcribed Image Text:

Price of eggs (per Price of tuna (per 100- Year Average monthly income pack of 10) rm po ¥187 #392 524,810 524,585 2003 2005 231 390