Wine (bottles per month) 6 5 3 13 ·12 3 Bread (loaves per month) The price of a bottle of wine is €1, and the price of a loaf of bread is €1. John has €6 to spend on bread and wine. a) In the figure above draw his budget line. b) How many bottles of wine does John buy? c) Now assume that the price of wine increases by €1, the price of loaf of bread remains at €1, and his income is constant at €6. Draw his new budget line in the figure above. How many bottles does he buy now?

Wine (bottles per month) 6 5 3 13 ·12 3 Bread (loaves per month) The price of a bottle of wine is €1, and the price of a loaf of bread is €1. John has €6 to spend on bread and wine. a) In the figure above draw his budget line. b) How many bottles of wine does John buy? c) Now assume that the price of wine increases by €1, the price of loaf of bread remains at €1, and his income is constant at €6. Draw his new budget line in the figure above. How many bottles does he buy now?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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