A consumer has a monthly budget of $100 for buying breakfast which he spends ent

Question

A consumer has a monthly budget of $100 for buying breakfast which he spends entirely on donuts (x) and breakfast burritos (y) from his favorite fast food restaurants. Donuts cost 50 cents each and Burritos cost $1 each.

a. Draw his budget line showing the points of intersection with the axes and the slope of the budget line. Find at least three combinations of donuts and burritos that he can buy with his budget.

b. If price of donuts goes up to 75c. and that of burritos goes up to $1.50, and he wants to get some extra money from his parents to keep his budget set the same as before, how much extra money would he need? ______________

Explain your answer.

c. Draw his budget line if the donut shop gives him 5 free donuts just for coming in, assuming he can not resell the donuts for cash

Explanation / Answer

a)budget line is 0.5x+y =100
b)multiplying above by 3/2
0.75x+1.5y =150
hence extra money needed =150-100 =50
c) 0.5*(x-5)+1*y =100

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