Gowri Has $6 Per Day to Purchase Lunch

question 134

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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