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#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-4-the-opportunity-set #study-session-4
Question

Nigel’s Pub has a total budget of £128 per week to spend on cod and lamb. The price of cod is £16 per kilogram, and the price of lamb is £10 per kilogram.

Calculate Nigel’s budget constraint.

Answer
The budget constraint is simply that the sum of the expenditure on cod plus the expenditure on lamb be equal to his budget: 128 = 16 QC + 10 QL. Rearranging, it can also be written in intercept slope form: QC = 128/PC – (PL/PC) QL = 8 – 0.625 QL.

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-4-the-opportunity-set #study-session-4
Question

Nigel’s Pub has a total budget of £128 per week to spend on cod and lamb. The price of cod is £16 per kilogram, and the price of lamb is £10 per kilogram.

Calculate Nigel’s budget constraint.

Answer
?

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-4-the-opportunity-set #study-session-4
Question

Nigel’s Pub has a total budget of £128 per week to spend on cod and lamb. The price of cod is £16 per kilogram, and the price of lamb is £10 per kilogram.

Calculate Nigel’s budget constraint.

Answer
The budget constraint is simply that the sum of the expenditure on cod plus the expenditure on lamb be equal to his budget: 128 = 16 QC + 10 QL. Rearranging, it can also be written in intercept slope form: QC = 128/PC – (PL/PC) QL = 8 – 0.625 QL.
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Nigel’s Pub has a total budget of £128 per week to spend on cod and lamb. The price of cod is £16 per kilogram, and the price of lamb is £10 per kilogram. Calculate Nigel’s budget constraint.

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4. THE OPPORTUNITY SET: CONSUMPTION, PRODUCTION, AND INVESTMENT CHOICE
nt Note: This exhibit shows Smith’s budget constraint if she has an income of $60 and must pay $0.50 per slice of bread and $0.75 per ounce of wine. EXAMPLE 4 The Budget Constraint <span>Nigel’s Pub has a total budget of £128 per week to spend on cod and lamb. The price of cod is £16 per kilogram, and the price of lamb is £10 per kilogram. Calculate Nigel’s budget constraint. Construct a diagram of Nigel’s budget constraint. Determine the slope of Nigel’s budget constraint. Solution to 1: &#13

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