Question

Assume that Mei has $100 per month to divide between dinners at a Chinese restaurant and nights at Zanzibar, a local pub. Assume that going to Zanzibar costs $20, and eating at the Chinese restaurant costs $10. Suppose that May spends two nights at Zanzibar and eats six times at the Chinese restaurant. Period dramas budget constraint ensures that she can afford six dinners and two nights at Zanzibar. Assume that May comes into some money and can spend $200 per month. Draw her new budget constraint.

Answer 1

To draw Mei's new budget constraint, plot two points on a graph and connect them to create a line.

Step-by-step explanation:

To draw Mei's new budget constraint, we need to consider her new monthly budget of $200 and her choices between dinners at a Chinese restaurant and nights at Zanzibar. Assume that going to Zanzibar still costs $20 and eating at the Chinese restaurant still costs $10.

If Mei spends two nights at Zanzibar and eats six times at the Chinese restaurant, she would spend a total of $140 ($20 x 2 + $10 x 6). This leaves her with $60 ($200 - $140) to allocate between the two activities.

To draw the new budget constraint, we can plot two points on a graph: (0,200) and (6,120). The x-axis represents the number of Chinese restaurant dinners and the y-axis represents the number of nights at Zanzibar. Connecting these two points gives us Mei's new budget constraint line.