Peter has an endowment of 3 units of good x and 5 units of good y. He can buy and sell x at a price of $100 and y at a price of $200. He receives an income of $700 as alimony from a former spouse. 

a. Calculate the amount of x that he could afford if he bought only x and the amount of y he could afford if he bought only y.

 

b. Write an equation for Peter’s budget.

Answer rating: 100% (QA)

a To calculate the amount of x that Peter could afford if he bought only x we can use the formula Qu... View the full answer