Question

Pls answer this Managerial Economics question. and provide examples and necessary graphs. thanks

Q.1. Parvez, a pharmacology student, has allocated $120 per month to spend on paperback novels and hamburgers at his favorite burger joint. Novels cost $8 each; hamburgers cost $6 each.

a. Draw his budget line.

a. Draw and label a second budget line that shows what happens when Parvez increases the allocation of money to $240.

c. Draw and label a third budget line that shows what happens when the price of a hamburger rises to $10.

Question 2: Assume that there are two goods. The price of the first good is $10 and the price of the second good is $20. The income is m=200.

• Determine the budget constraint.
• Determine the slope and the intercepts of the budget line.
• Graph the budget set.
• Assume that income increases to m=300. At the same time the price of good 1 increases to 20. Determine the equation of the new budget line.
• Determine the slope and the intercepts of the new budget line.
• Graph the new budget set.

Answer 1

1.

2.Slope of budget line=-(P1/P2)

Slope=-(10/20)=-(1/2)

Please note that we are under obligation to answer only the first four questions.