Problem 1 Anne likes to have bagels and orange juice for breakfast. A consumptio

Question

Problem 1 Anne likes to have bagels and orange juice for breakfast. A consumption bundle consists of a quantity of bagels, z (number of bagels), and a quantity of orange juice, y liters of orange juice). For all of the following questions you can assume that the consumption set is R2. This means that bagels and orange juice can be consumed in any non-negative quantity. Anne has a wealth of S10 to spend. (a) At supermarket ABC the price of bagels is pr 2s/bagel and the price of orange juice is pv 4$/liter. Draw Anne's budget set when she shops at supermarket-ABC. What is the slope of the budget line? (b) At supermarket-XYZ the price of bagels is 4S/bagel and the price of orange juice is g, 2S/liter. Draw Anne's budget set if she shops at supermarket-XYZ. What is the slope of the budget line?

Explanation / Answer

48 * x + 28* y = 10 Budget Set Slope of the budget line = - 28/48 = -0.583

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