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.
Answer
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.)
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.
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.
Answer
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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Open it 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:

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