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.

Determine the slope of Nigel’s budget constraint.
With quantity of cod measured on the vertical axis, the slope is equal to –(PL/PC) = –10/16 = –0.625. (Note: If we had chosen to measure quantity of lamb on the vertical axis, the slope would be inverted: –(PC/PL) = −1.6.)

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.

Determine the slope of Nigel’s budget constraint.
?

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.

Determine the slope of Nigel’s budget constraint.
With quantity of cod measured on the vertical axis, the slope is equal to –(PL/PC) = –10/16 = –0.625. (Note: If we had chosen to measure quantity of lamb on the vertical axis, the slope would be inverted: –(PC/PL) = −1.6.)
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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.

#### Original toplevel document

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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