Question

Kali lives on mangoes and avocados, Pm = $5, Pa = $10, and her income is $200.

Identify and illustrate on a new graph Kali’s new budget constraint if her income doubled, the price of mangoes doubled, and the price of avocados remained constant.

Answer 1

Let Pm and Pa denote the Prices of Mangoes and Avocados

$5Pm+10Pa=200\\$

when the price of mangoes and income is doubled

$!0Pm+10Pa=400$

The Blue line represents Kali new budget line