Solution-Milk for additional apples

Milk for additional apples

Reference no: EM131077161

Emma consumes only apples and milk. She does not have any income, but she inherited an apple tree and a single cow from her grandfather. The apple tree produces 100 apples each year and the cow gives 160 gallons of milk. Suppose that Emma can freely buy and sell apples and milk in the market at a price of $1 perapple and $2 for a gallon of milk. That is, she can sell some of her apples foradditional milk, or she can sell some of her milk for additional apples. Draw herbudget constraint, with milk on the horizontal axis, and apples on the vertical, carefully labeling the intercepts and slope. (Hint: she begins at her initial bundle andcan trade from there. Determine her trading ratio of apples for milk.)

Reference no: EM131077161

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Milk for additional apples

Reference no: EM131077161

Reference no: EM131077161

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