Answer to Question #275927 in Microeconomics for gini

Question

Q2. Suppose you are on a three-day trip to Rome (from Monday to Wednesday) and during your stay you decide to consume only Waffle and Ravioli (measured on the horizontal and vertical axes respectively). You have a given amount of money (some constant) to spend on each of the three days. Suppose that the price of Waffle rises between Monday and Tuesday. If your optimum points of consumption on Monday and Tuesday are respectively called M and T, such that M to the left of T, what does it say about both the commodities? Illustrate your answer using an appropriate diagram. [3 MARKS, Word limit: 200]

Answer 1

As the cost of waffle increases among monday and tuesday and M to one side of tuesday implies that the cost of waffle and on the monday is higher than that of on tuesday. with given pay the purchaser utilize less of measure of waffle on the monday and utilize more Ravioli. On tuesday as the cost of waffle somewhat falls, he consumes more waffle than Monday.