Answer to Question #264465 in Microeconomics for Jojo

Question

If Veronica Vaughn spends all of her daily income on cigarettes and Yoo Hoo, she can afford 10 packs of cigarettes and 10 bottles of Yoo Hoo. She can also afford 6 packs of cigarettes and 22 bottles of Yoo Hoo.

Draw verconica's daily budget set with packs of cigarettes on the x axis and bottles of yoo-hoo on the y axis

Answer 1

(a)) I = PxX + PyY

Where: I = Income

Px = Price of cigarettes

Py = Price of Yoo Hoo

X = Cigarettes

Y = Yoo Hoo

I = 10Px + 10Py

I= 6Px + 22Py

I/10 = Px

I/10 = Py

Budget line graph for

I = 10Px + 10Py