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Budget Constraint

Last updated over 2 years ago

5 questions

You have a $50. You'd like to buy $10 ___'s. and a $2 ____'s.

1

Question 1

1.

1

1

1

1

What would the $10 be? $2?

Question 2

2.

You still have $50.

Create a schedule (another word to say table) of how much you could buy of each product. (Hint: label the columns "quantity of $10 item" and "quantity of $2 item.")

Question 3

3.

Create a line that represents the above relationship where the quantity of item 1 and quantity of item 2 are the axes units. (Hint: how much of just one item could you buy? How much of just the other could you buy? Hint 2: Could you plot these points on the axes intercepts?)

Question 4

4.

In this scenario, what’s the opportunity cost of choosing to buy just one of the $10 items?

Five of the $2 items.

One of the $5 items.

One of the $10 items.

Question 5

5.

Let's critique this idea of budget constraints. What's one big assumption of this idea of budget constraints?