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Suppose Lisa initially has income of $40, the price of pizza (pz) is $1.00 per slice, and the price of burritos (PB) is $2.00 per burrito. Her budget line (L') is illustrated in the figure to the right. Suppose Lisa's budget and the price of pizza double, but the price of burritos remains constant. Show how her budget constraint and opportunity set changes. Is Lisa necessarily better off than before these changes? (Hint: What happens to the intercepts of the budget line?) 1.) Using the line drawing tool, graph Lisa's new budget constraint. Label this line 'L²: 2.) Using the triangle drawing tool, shade in Lisa's opportunity set. Label this 'OS. Carefully follow the instructions above, and only draw the required objects. Q 100 90- 80- 70 60- 50- B. Burritos per semester 40- 30- 20 10 0- ° 10 20 30 40 50 60 70 80 90 100 Z, Pizzas per semester

Suppose Lisa initially has income of $40, the price of pizza (pz) is $1.00 per slice, and the price of burritos (PB) is $2.00 per burrito. Her budget line (L') is illustrated in the figure to the right. Suppose Lisa's budget and the price of pizza double, but the price of burritos remains constant. Show how her budget constraint and opportunity set changes. Is Lisa necessarily better off than before these changes? (Hint: What happens to the intercepts of the budget line?) 1.) Using the line drawing tool, graph Lisa's new budget constraint. Label this line 'L²: 2.) Using the triangle drawing tool, shade in Lisa's opportunity set. Label this 'OS. Carefully follow the instructions above, and only draw the required objects. Q 100 90- 80- 70 60- 50- B. Burritos per semester 40- 30- 20 10 0- ° 10 20 30 40 50 60 70 80 90 100 Z, Pizzas per semester

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter10: Consumer Choice Theory
Section: Chapter Questions
Problem 9P
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Suppose Lisa initially has income of $40, the price of pizza (pz) is $1.00 per slice, and the price of burritos (PB) is $2.00 per burrito. Her budget line (L¹) is illustrated in the figure to the right. Suppose Lisa's budget and the price of pizza double, but the price of burritos remains constant. Show how her budget constraint and opportunity set changes. Is Lisa necessarily better off than before these changes? (Hint: What happens to the intercepts of the budget line?) 1.) Using the line drawing tool, graph Lisa's new budget constraint. Label this line 'L². 2.) Using the triangle drawing tool, shade in Lisa's opportunity set. Label this 'OS.' Carefully follow the instructions above, and only draw the required objects. B. Burritos per semester 100- Q 90- Q 80- ☑ 70- 60- 50- 40- 30- 20- 10- 0- 0 10 20 30 40 50 60 70 80 90 100 Z, Pizzas per semester
Transcribed Image Text:Suppose Lisa initially has income of $40, the price of pizza (pz) is $1.00 per slice, and the price of burritos (PB) is $2.00 per burrito. Her budget line (L¹) is illustrated in the figure to the right. Suppose Lisa's budget and the price of pizza double, but the price of burritos remains constant. Show how her budget constraint and opportunity set changes. Is Lisa necessarily better off than before these changes? (Hint: What happens to the intercepts of the budget line?) 1.) Using the line drawing tool, graph Lisa's new budget constraint. Label this line 'L². 2.) Using the triangle drawing tool, shade in Lisa's opportunity set. Label this 'OS.' Carefully follow the instructions above, and only draw the required objects. B. Burritos per semester 100- Q 90- Q 80- ☑ 70- 60- 50- 40- 30- 20- 10- 0- 0 10 20 30 40 50 60 70 80 90 100 Z, Pizzas per semester
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