What does her budget constraint look like now

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Q. Draw her budget constraint. An outbreak of potato rot raises price of potatoes to $4 per pound. Supermarket ends its promotion. What does her budget constraint look like now? What combination of meat and potatoes maximizes her utility?

Jane receives utility from days spent travelling on vacation domestically (D) and days spent 10DF travelling on vacation in a foreign country (F), as given by utility function U(D,F) = . In addition, price of a day spent travelling domestically is $100, price of a day spent travelling in a foreign country is $400 and Janes annual travel budget is $4,000. Graph Janes budget line on same graph. Can Jane afford any of bundles that give her a utility of 800? What about a utility of 1200?

Reference no: EM1369162

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