Question
Assume you have a budget of $600 for travel that you will spend on gasoline and...
- Assume you have a budget of $600 for travel that you will spend on gasoline and food. Assume the price of gasoline is $5.00 per gallon and the price of food is $15 per meal.
- Graph the budget line placing food on the horizontal axis indicating the x and y intercept values (the maximum possible of each).
- On your graph as point A show the consumer purchases 75 units of gasoline. How many meals can be purchased? Clearly label this point on your graph.
- Graph the new budget line when the price of meals increases to $20. Label it as BL2.
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