diff_months: 16

Granny budget line economics Case Study Assignment

Order Code: 484792
• University :

University Of Oxford

• Country :

Instructions

Granny lives in the Woods and consumes only bread and fruits and has \$60 dollars to spend of food each week. One week she falls ill and has to ask her niece, Red, to buy her weekly food (Granny will reimburse Red for the \$60 she spends on food, of course). Red lives in the City, where the price of fruit is \$2 per kilogram and the price of bread is also \$2 per loaf. Red decided to buy 20 loaves of bread for Granny.

1. How much fruit did Red buy for Granny?

2. In a diagram measuring the quantity of bread on the horizontal axis draw: i. Red's budget line, ii. the point (label it C) showing the basket Red purchased in the city, and iii. the Indifference curve passing through point C.

3. What is the slope of the budget line, and its economic meaning?
Heading to Granny's house in the Woods with the food from question 1 in her basket, Red unexpectedly meets the infamous trader B. B. Wolf, which offers to buy or sell food at a price of \$6 per kilogram of fruits, and \$3\$ per loaf of bread.

4. In the diagram you used to answer question 2, and add Red's budget line after meeting Wolf. Should Red trade with Wolf? Note: Red can always afford point C (if she desires so), by simply not trading with Wolf. This means her new budget line must pass through point C! And since you know the prices at which she can trade with Wolf, you should easily be able to calculate the slope. If you know a point and the clone of a line passing through it, it should be easy to draw that line.

5. Draw, in the diagram you used to answer question 2 and 4: i. the point (label it W) showing Red's basket after trading (or not trading) with Wolf, and ii. the indifference curve passing through it.

6. Draw, in the same diagram you used to answer questions 2, 4, and 5, the compensated budget line of Red's meeting with Wolf.

7. Show, in the same diagram you used to answer questions 2, 4, 5, and 6, the income effect and the substitution effect on Granny's consumption of bread due to Red's meeting Wolf.
Note: I expect only ONE diagram to answer all above questions. That diagram must be very well labelled, so I do not have to guess what the various lines and curves are.

Get your Granny budget line economics Case Study assignment solved by our Mathematics Experts from Exam Question Bank . Our Assignment Writing Experts are efficient to provide a fresh solution to all question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing Style. Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered.

You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turn tin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.

• Uploaded By : Katthy Wills
• Posted on : February 03rd, 2023
• Views : 271

Choose a Plan

80 USD
• All in Gold, plus:
• 30-minute live one-to-one session with an expert
• Understanding Marking Rubric
• Structuring & Formatting
• Referencing & Citing
Most
Popular

Gold

30 50 USD
• Get the Full Used Solution
(Solution is already submitted and 100% plagiarised.
Can only be used for reference purposes)
Save 33%

Silver

20 USD
• Journals
• Peer-Reviewed Articles
• Books
• Various other Data Sources – ProQuest, Informit, Scopus, Academic Search Complete, EBSCO, Exerpta Medica Database, and more