problem-set-1

# Telephone calls to his family which will be measured

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telephone calls to his family (which will be measured with minutes of talk (m) ). The unit price of a book is 10 YTL. For telephone calls he has the option to buy three types of calling cards: Card A allows 50 minutes of talk for 10 YTL, Card B allows for 100 minutes of talk for 15 YTL and Card C allows for 250 minutes of talk for 25 YTL. Assuming perfect divisibility of goods, draw Oguz’s budget set. 3. Berna likes to consume books and candy bars. She has 500\$ to spend every week. The price of each book is p b = 10\$ and the price of each candy bar is p c = 1\$. (Assume divisibility of goods) (a) Suppose that book store gives a 10 percent reduction on book purchases above 10 units (only applies to extra units). Draw Berna’s budget set. (b) Berna realizes that if she chooses to purchase candy bars in packages their per unit price is cheaper. Suppose that each candy bar package contains 50 units and costs 30\$. Draw Berna’s budget set. (c) Suppose both part (a) and (b) applies at the same time. Draw Berna’s budget set. 4. Furkan is a student living away from his home town. He has 50\$ to spend each week. He spends his money to purchase movie tickets and hotdogs. The price of a movie ticket is p m = 8\$ and the price of a hotdog is p h = 4\$. Draw Furkan’s budget set.

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