Answer to Question #184221 in Microeconomics for Arooj

Question

a. Budget of Daniel is Rs.700.

He needs to buy sandwiches and juices for a picnic party. The price of 1

sandwich is Rs.35 and that of a juice is Rs.10. draw his budget line.

b. The price of sandwich and

juices got doubled next week. Now how many sandwiches and juices can he buy for

the party on next weekend. Also draw a budget line.

c. Before next weekend his

income increased and now he can spend Rs.1400 for the picnic. Draw the new

budget line.

Answer 1

a.)Income =$Rs 700$

Price of sandwich=$Rs 35$

Price of juices=$Rs 10$

$income\div price=Quantity$

$Rs 700\div Rs35 =20$ Assume its x on the plane

$Rs 700\div Rs 10=70$ Assume its y on the plane

b.) Now the '

price of sandwiches =$(35\times2)=70$ New price

price of juices =$(10\times2) =20$ New price

New quantity of sandwiches and juices he can buy.

$700\div 70=10$

$700\div20=35$

c.)New income=$Rs 1400$

$Rs1400\div Rs70=20$

$Rs1400\div Rs20=70$