ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Instructions:
Once you’ve read Chapter 1: Limits, Alternatives, and Choices and Chapter 1 Appendix: Graphs and Their Meaning then read the scenario and find the solutions to the problems.
Scenario: Suppose that you are on a desert island and possess exactly 20 coconuts. Your neighbor, Friday, is a fisherman, and he is willing to trade 2 fish for every 1 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.
Problems:
- On a single figure, draw budget lines for trading with Friday and for trading with Kwame. (Put coconuts on the vertical axis.)
Note: The budget line from trading with Friday (or Kwame) features a set of attainable combinations of coconuts and fish.
- What is the slope of the budget line from trading with Friday?
- What is the slope of the budget line from trading with Kwame?
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