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.

Question

Quizplus · Accepted Answer

The Answer of 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.

Peter Has an Endowment of 3 Units of Good X