Class6 - Econ 100 Class 6-7: Budget Sets and Constrained...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 100 1 Winter 2012: Professor Bushnell Econ 100 Class 6-7: Budget Sets and Constrained Choice 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Econ 100 2 Winter 2012: Professor Bushnell Budget Constraint budget line (or budget constraint ) - the bundles of goods that can be bought if the entire budget is spent on those goods at given prices. opportunity set - all the bundles a consumer can buy, including all the bundles inside the budget constraint and on the budget constraint
Background image of page 2
Econ 100 3 Winter 2012: Professor Bushnell Budget Constraint • If Lisa spends all her budget, Y , on pizza and burritos, then p B B + p Z Z = Y – where p B B is the amount she spends on burritos and p Z Z is the amount she spends on pizzas. – This equation is her budget constraint. • It shows that her expenditures on burritos and pizza use up her entire budget.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Econ 100 4 Winter 2012: Professor Bushnell Budget Constraint (cont). • How many burritos can Lisa buy? – To answer solve budget constraint for B (quantity of burritos): P B B + P Z Z = Y P B B = Y P Z Z B = Y P Z Z P B
Background image of page 4
Econ 100 5 Winter 2012: Professor Bushnell Budget Constraint (cont). • From previous slide we have: – If p Z = $1, p B = $2, and Y = $50, then: B = $50 ($1 × Z ) $2 = 25 0.5 Z
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Econ 100 6 Winter 2012: Professor Bushnell Allocations of a $50 Budget Between Burritos and Pizza
Background image of page 6
Econ 100 7
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 22

Class6 - Econ 100 Class 6-7: Budget Sets and Constrained...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online