Assume that a consumer faces the budget constraints shown.

a. Assuming that income is the same on both occasions, describe the difference in relative prices between panel a and panel b.
b. If income in panel b is $320, what is the price of good X?
c. If income in panel a is $175, what is the price of good Y?
d. Give an example of prices that may produce the graphs in panel A and panel B (hint: what are the relative prices?)

Question

Assume that a consumer faces the budget constraints shown.
  
a. Assuming that income is the same on both occasions, describe the difference in relative prices between panel a and panel b.
b. If income in panel b is $320, what is the price of good X?
c. If income in panel a is $175, what is the price of good Y?
d. Give an example of prices that may produce the graphs in panel A and panel B (hint: what are the relative prices?)

Quizplus · Accepted Answer

The Answer of Assume that a consumer faces the budget constraints shown.
  
a. Assuming that income is the same on both occasions, describe the difference in relative prices between panel a and panel b.
b. If income in panel b is $320, what is the price of good X?
c. If income in panel a is $175, what is the price of good Y?
d. Give an example of prices that may produce the graphs in panel A and panel B (hint: what are the relative prices?)

Assume That a Consumer Faces the Budget Constraints Shown