Raquel the representative consumer enjoys two types of pound cake: lemon (l) and chocolate (c). Raquel’s favorite bakery sells chocolate pound cakes for $12 each and lemon pound cakes for $15 each.

1. Suppose that Raquel donates $60 to her local food bank, leaving her with $300 to spend on cake. Draw a graph of Raquel’s new budget constraint, again making sure to label the axes, intercepts, and slope. In a few sentences describe what happens to the slope and each of the intercepts? Do they change? Why or why not?

Answer rating: 100% (QA)

Raquels original budget constraint is 12c 15l 360 where c is the number of chocolate pound cakes l i... View the full answer