Estimate the cost, Financial Accounting

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Olivia has received a $15 gift certificate that is redeemable only for roasted peanuts. Bags of roasted peanuts come in two sizes, regular and jumbo. A regular bag contains 30 peanuts and a jumbo bag contains 50. If a regular bag costs 50 cents and a jumbo bag costs 75 cents, how many of each will Olivia purchase? What if the jumbo bag costs $1? In each case, draw a budget line that shows her available choices, and indicate her best choice by adding indifference curves. Assume that Olivia cares only about the number of peanuts, and not about the size of the bag.

 

 


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