Question

Exercise 16 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 510. How much will the consumer purchase of each good? She will purchase 20 potatoes She will purchase 2 stek(s) Now suppose that the price of a potato increases to $100. How much will the consumer purchase of each good? She will purchase 20 potatoes She will purchase traks) Now suppose that the price of a potato increases to $125. How much will the consumer purchase of each good? She will purchase 20 potatoes She will purchase tek(s)

Answer 1

3) when price of potato becomes 1.25

Income ques! - 308 for 10 days १ sre connumes 10: P. p '= 0.5$ Ps = 10 20 potatoes in days. (0.5190) + (Ps 15) (10) Ss Son - 30 30 -10 S. 2,1 | P= 20 & now so CD (20) + (P) s (102 s 30 20 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.