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4. THE OPPORTUNITY SET: CONSUMPTION, PRODUCTION, AND INVESTMENT CHOICE the expenditure on wine does not exceed his income per time period. We can represent this income constraint (or budget constraint ) with the following expression:
Equation (3)
P B Q B + P W Q W ≤ I
<span>This expression simply constrains Warren to spend, in total, no more than his income. At this stage of our analysis, we are assuming a one-period model. In effect, then, Warren has no reason not to spend all of his income. The weak inequality becomes a strict equality, as shown in Equation 4, because there would be no reason for Warren to save any of his income if there is “no tomorrow.”
Equation (4)
P B Q B + P W Q W = I
From this equation, we see that if Warren were to spend all of his income only on bread, he could buy I/P B slices of bread. Or if he were to confine his expenditure to wi
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