Answer to Question #134706 in Microeconomics for Saviour

Question

assume that the price falls from 40N to 20N,assuming that John still consumes 30kg of beans,find the new quantity of peas

Answer 1

Suppose the individual name is let's say John, and has an income of $ZMW10$ . Therefore if

John's income is $ZMW10$ and the price of beans is $20N$ per kg and the price of peas is $40N$ per kg. If he consumes $30N$ kg of beans and he is spending all of his income then he is going spend his income equal to $ZMW10\ -30*20N$ on peas.

so; $\frac {(ZMW10-30*20N)}{40N}$  is the total Kg's of peas John is going to consume.

Now assuming the price of peas falls from $40N$ to $20N$ , using the same argument as above he would be consuming $\frac {(ZMW10-30*20N)}{20N}$  Kg's of peas.