Write the household''s budget equation

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Reference no: EM131126704

Assume a household with a monthly income of $5,000. This household allocates its income to the purchasing of food and nonfood products. If the average price of food products is $20 per unit and nonfood items cost $150 per unit

1. Write the household's budget equation.

2. If this household consumes 100 units of food products, how many units of nonfood items it can buy?

3. Assume that the price of nonfood products increases to $160. Write the new budget equation.

4. If this household wants to purchase food and nonfood items in the same proportion as in part (b), what is the household's new bundle in part (c)?

Reference no: EM131126704

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