Peter Has an Endowment of 3 Units of Good X

question 9

Essay

Peter has an endowment of 3 units of good x and 5 units of good y.He can buy and sell x at a price of $100 and y at a price of $200.He receives an income of $700 as alimony from a former spouse.
a.Draw Peter's budget line for x and y.Show his initial endowment of x and y on your diagram.
b.Calculate the amount of x that he could afford if he bought only x and the amount of y he could afford if he bought only y.
c.Write an equation for Peter's budget.

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Definitions:

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Peer Pressure

Encouragement to conform to one’s friends or contemporaries in behavior, dress, and attitude; usually considered a negative force, as when adolescent peers encourage one another to defy adult authority.

Adolescent Burden

The stresses and pressures faced by teenagers due to various factors such as academic demands, social relationships, and transitions into adulthood.

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