Answer to Question #178051 in Math for Dave

Question

Alex has a weekly budget of PhP 6, 000, which she likes to spend on foods and clothes. (1) If the price of food is PhP 150 each meal, what is the maximum meals she could buy in a week? (2) If the average price of a clothe is PhP 300, what is the maximum number of clothes she could buy in a week? (3) Draw Alex’s budget constraint with food on the horizontal axis and clothing on the vertical axis. What is the slope of the budget constraint? (4) What is Alex’s opportunity cost of purchasing a 1 meal food

Answer 1

(1)

$$\dfrac{6000}{150}=40$$

She could buy no more than 40 meal in a week.

(2)

$$\dfrac{6000}{300}=20$$

She could buy no more than 20 clothes in a week.

(3)

The slope of the budget constraint is determined by the relative price of clothing and meal. All along the budget set, giving up one clothing means gaining two meal foods.

(4) Alex’s opportunity cost of purchasing a 1 meal food is 1/2 clothing she would have to give up in order to afford another meal.

She must decide whether or not to choose the meal food depending on whether the value of the burger exceeds the value of the forgone alternative—in this case, clothing.