ANSWER to part (f)/Question 2/Discussion 1(A)With the lump‐sum subsidy, Melissa has $70 more dollars to spend on both goods. So, her budgetlines shifts up (parallel shift; the intercepts change). The slope remains the same as of the initial budgetline (=‐2/7).(B)With the coupon for turkey burgers (B), Melissa can use the extra $70 only on turkey burgers. Hence,she can buy as many as 110 burgers if she only spends her income on burgers; because she can nowspend $770 on burgers. However, the maximum she can spend on tuna fish remains $700 and themaximum she can buy if she spends all her income on tuna fish is 350 tins.So, up to the first 10 turkey burgers that she can get with the coupon ($70/PB), she can only buy as manyas 350 tins. If she wants to buy more turkey burgers, she should use her income. After B=10, the budgetline has the same slope as of the initial budget line (=
This is the end of the preview.
access the rest of the document.