If you think Edmund is odd, consider his brother Emmett. Emmett consumes speeches by politicians and university administrators. He is paid $1 per hour for listening to politicians and $2 per hour for listening to university administrators. Emmett consumes one good for which he must pay. We have agreed not to disclose what that good is, but we can tell you that it costs $15 per unit and we shall call it Good X. In addition to what he is paid for consuming speeches, Emmett receives a pension of $50 per week.
(a) Write down a budget equation stating those combinations of the three commodities, Good X, hours of speeches by politicians (P), and hours of speeches by university administrators (A) that Emmett could afford to consume per week. 15X − 1P − 2A = 50.
(b) On the graph above, draw a two-dimensional diagram showing the locus of consumptions of the two kinds of speeches that would be possible for Emmett if he consumed 10 units of Good X per week.