Question

Consider a household that has $300 to spend on back-toschool shoes. They visit one of the discount shoe stores where shoes are buy one pair for $50, get the second half off.

a. Draw the budget constraint that this family faces. Be sure to label axes and use numbers where possible.

Answer 1

The family's budget constraint can be represented graphically. The budget constraint will be a straight line with an intercept on the Y-axis and an intercept on the X-axis, representing the maximum quantity of each pair of shoes the family can afford.

Step-by-step explanation:

The family's budget constraint can be represented graphically. Let's assume that the quantity of the first pair of shoes is represented on the X-axis and the quantity of the second pair of shoes is represented on the Y-axis. The price of the first pair of shoes is $50, while the price of the second pair of shoes is half that, which is $25.

Since the family has a total of $300 to spend, we can calculate the maximum quantity of each pair of shoes they can afford by dividing $300 by the respective prices. Let's say they can afford to buy the Q1 quantity of the first pair and the Q2 quantity of the second pair. Now we can plot these points on the graph and connect them to form the budget constraint.

The budget constraint will be a straight line with an intercept of (0,6) on the Y-axis and an intercept of (6,0) on the X-axis, representing the maximum quantity of each pair of shoes the family can afford