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Budget constraint changes graphically

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Reference no: EM131476157

Suppose a consumer has a daily income of $48 and purchases just two goods, A and B. The price of A is $8 and the price of B is $6.

a. Draw the budget line for the consumer in a graph. Indicate the area of the graph that is attainable given the income and the area that is unattainable.

b. Suppose the price of good A drops to $6: how does the budget line change? Illustrate this graphically.

c. Suppose further that the consumerâs income increases to $60. Show how the budget constraint changes graphically.

Reference no: EM131476157

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