Question

A consumer lives on a diet of solely steak and potatoes. Her budget is ​$30 for every 10 days and she must buy enough potatoes to eat at least 2 potatoes per day. If a potato costs $0.50 and the price of a steak is ​$10.How much will the consumer purchase of each​ good?

Now suppose that the price of a potato increases to ​$1.25. How much will the consumer purchase of each​ good?

She will purchase ......... potatoes. She will purchase ​.......... steak(s).

Answer 1

2) when price of potato becomes 1.25

Income Qua?” for 30$ 10 days Ps = 10 o + sree coma umes 10 days so, P. p '= 0.5$ 20 potatoes in 0.5YOO + (st) = 30 (10) Ss 30 -10 sa 2, P= 20

Then for consuming 20 potatoes she would need 25$.

But with remaining budget, she will not be able to have any quantity of steak.

So, she will consume zero units of steak from his budget and 24 units of potatoes.