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djnextlevel djnextlevel
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Individual Preferences and Choices

The table represents an indifference curve for pan dulce and empanadas.

PointPan dulceEmpanadas
A165
B128
C610
D218

Olga has $54.00 to spend on pan dulce and empanadas. If pan dulce is $6.50 each and empanadas are $1.50 each, what combination of pan dulce and empanadas will Olga consume?

▸ 6 pan dulce, 10 empanadas

▸ 10 pan dulce, 8 empanadas

▸ 2 pan dulce, 18 empanadas

▸ 16 pan dulce, 5 empanadas
Textbook 

Macroeconomics


Edition: 3rd
Authors:
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eap8eap8
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6 pan dulce, 10 empanadas

First, determine the budget needed to purchase at each point
A = PricePanDulce*16 + PriceEmpanadas*5 = 6.50*16 + 1.50*5 = $111.50
B = PricePanDulce*12 + PriceEmpanadas*8 = 6.50*12 + 1.50*8 = $90.00
C = PricePanDulce*6 + PriceEmpanadas*10 = 6.50*6 + 1.50*10 = $54.00
D = PricePanDulce*2 + PriceEmpanadas*18 = 6.50*2 + 1.50*18 = $40.00

With a budget of $54.00, point C is the only affordable point.
1

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djnextlevel Author
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2 weeks ago
Thanks for your help!!
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Smart ... Thanks!
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