Use indifference-curve and budget constraint diagrams

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As a CEO of a nonprofit agency that provides services for children in crisis, you are developing a model to determine the “optimal” bundle of services you can provide based on $2000 provided by one of your biggest philanthropist. However, she has asked that you spend the money on clothes or shelter to children in need. You learn that the price of shelter (e.g. bed) (Y axis) will cost $100 per bed and a warm winter coat (X axis) will cost you $200 per coat. Based on your experience, you would be willing to purchase 5 beds, which you feel should accommodate the children in your community in need. Use an indifference-curve and budget constraint diagrams to illustrate the optimal consumption bundle. Be sure to label your diagram and explain your answer as completely as possible. Please explain your answers based on the appropriate school of political economic thought.

Reference no: EM131004490

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