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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.

Construct a diagram of Nigel’s budget constraint.

Construct a diagram of Nigel’s budget constraint.

Answer

We can choose to measure either commodity on the vertical axis, so we arbitrarily choose cod. Note that if Nigel spends his entire budget on cod, he could buy 8kg. On the other hand, if he chooses to spend the entire budget on lamb, he could buy 12.8kg. Of course, he could spread his £128 between the two goods in any proportions he chooses, so the budget constraint is drawn as follows:

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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.

Construct a diagram of Nigel’s budget constraint.

Construct a diagram of Nigel’s budget constraint.

Answer

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Tags

#has-images

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.

Construct a diagram of Nigel’s budget constraint.

Construct a diagram of Nigel’s budget constraint.

Answer

We can choose to measure either commodity on the vertical axis, so we arbitrarily choose cod. Note that if Nigel spends his entire budget on cod, he could buy 8kg. On the other hand, if he chooses to spend the entire budget on lamb, he could buy 12.8kg. Of course, he could spread his £128 between the two goods in any proportions he chooses, so the budget constraint is drawn as follows:

status | not learned | measured difficulty | 37% [default] | last interval [days] | |||
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repetition number in this series | 0 | memorised on | scheduled repetition | ||||

scheduled repetition interval | last repetition or drill |

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