Charlie purchases burritos (=Y₁, in #) and tacos (=Y₂, in #). The price of burritos is P₁=$5/burrito, and the price of tacos is P₂=$4/taco. Weekly income for Charlie is equal to $40. Graph the budget line and opportunity set.
A. Draw an indifference curve in the graph, and show an equilibrium point.
B. Suppose that the price of tacos increases from $4/taco to $6/taco, resulting in the quantity demanded of tacos to decrease from 180 tacos to 160 tacos.
What is the point elasticity of demand for tacos? Are tacos elastic or inelastic? Why?

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The Answer of Charlie purchases burritos (=Y₁, in #) and tacos (=Y₂, in #). The price of burritos is P₁=$5/burrito, and the price of tacos is P₂=$4/taco. Weekly income for Charlie is equal to $40. Graph the budget line and opportunity set. A. Draw an indifference curve in the graph, and show an equilibrium point. B. Suppose that the price of tacos increases from $4/taco to $6/taco, resulting in the quantity demanded of tacos to decrease from 180 tacos to 160 tacos. What is the point elasticity of demand for tacos? Are tacos elastic or inelastic? Why?

Charlie Purchases Burritos (=Y1, in #) and Tacos (=Y2, in #)

Charlie Purchases Burritos (=Y₁, in #) and Tacos (=Y₂, in #)