Missy is in school learning to be a welder she spends long hours studying and drinking...

Missy is in school learning to be a welder she spends long hours studying and drinking coffee and long hours practicing in the hot dirty shop and therefore takes frequent shower is Missy has $70 per month to spend on this soap and coffee she needs to function properly and the accompanying graphic move the BC line to correctly detect Missy budget constraint assuming the soap cost $3.50 per bottle and the coffee cost $14 per pound if a point will not go where you want it to put it by placing the other end. There they classify the letter points according to whether they describe baskets of goods that are on affordable affordable and exhaust miss his budget or affordable with money left over

Homework Answers

Answer #1


Missy has $70.00 a month to spend on the soap and coffee, i.e., budget per month is: $70

The soap cost is: $3.50, and

The coffee cost is: $14.00

The equation to the budget constraint:

Budget (M) = (Px*Qx) +(Py*Qy)

Now Qx = M/Px and Qy = M/Py


If Missy spends his entire $70 on soap, he can buy 20 soaps i.e., 70/3.5 = 20

If Missy spends his entire $70 on coffee, he can buy 5 coffee’s i.e., 70/14 = 5.

The Missy's budget constraint could be drawn as below:

That means, 1 pound of coffee = 4 bottles of soap.

So, Every time Missy buys a pound of coffee, she is giving up the opportunity to buy:

4 bottles of soap.

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