Essay
Gowri has $6 per day to purchase lunch. She spends all of her lunch money on pizza and iced tea. The price of pizza is $2.00 per slice and iced tea costs $1 per bottle.
a. Draw Gowri's budget constraint and label it BC0. Put pizza on the horizontal axis and iced tea on the vertical axis. Be sure to identify the intercept values.
b. If the price of iced tea rises to $1.20 per bottle, show what will happen to her budget constraint in your diagram. Be sure to indicate any new intercept values.
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b. BC1 in the fig...View Answer
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Correct Answer:
Verified
b. BC1 in the fig...View Answer
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