What is the slope of budget line from trading

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Reference no: EM13837892

Suppose that you are on a desert island and possess exactly 20 coconuts. Your neighbour, Friday, is a fisherman, and is willing to trade 2 fish for every coconut that you are willing to give him. Another neighbor, Kwame, is also a fisherman, and he is willing to trade 3 fish for every 1 coconut.

a. Graph the budget line from trading with Friday and for trading with Kwame. Put the coconuts on the vertical axis.

b. What is the slope of budget line from trading with Friday?

c. What is the slope of the budget line from trading with Kwame?

d. If you were going to trade coconuts for fish, would rather trade with Friday, or Kwame? Explain.

Reference no: EM13837892

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