2. Zhoran has a budget of $36 for fruit. Strawberries cost $4 per pound and grapes cost $3 per pound. She likes both type of fruit and she has a diminishing marginal rate of substitution. (a) Draw a diagram illustrating Zhoran's budget constraint. Label both intercepts with their numerical values. What is the slope of her budget line? (b) Illustrate Zhoran's optimal combination of strawberries and grapes on your dia- gram. Any picture that is consistent with the facts described here is acceptable. Explain how your diagram demonstrates that the point you've chosen is the op- timal point for Zhoran.

2. Zhoran has a budget of $36 for fruit. Strawberries cost $4 per pound and grapes cost $3 per pound. She likes both type of fruit and she has a diminishing marginal rate of substitution. (a) Draw a diagram illustrating Zhoran's budget constraint. Label both intercepts with their numerical values. What is the slope of her budget line? (b) Illustrate Zhoran's optimal combination of strawberries and grapes on your dia- gram. Any picture that is consistent with the facts described here is acceptable. Explain how your diagram demonstrates that the point you've chosen is the op- timal point for Zhoran.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 8P

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