Khumo earns P500 per week. She spends her entire income on two goods: movies and bottles of wine. the price of a movie is P10 and the price of a bottle of wine is P10. Draw Khumo's budget line and shade in her budget set

Answer 1

To draw Khumo's budget line, we need to find the maximum amount of movies and bottles of wine she can buy with her income.

Let's assume Khumo spends all her income on movies. The maximum number of movies she can buy is given by:

Maximum movies = Income / Price of a movie
Maximum movies = P500 / P10
Maximum movies = 50 movies

Let's assume Khumo spends all her income on bottles of wine. The maximum number of bottles of wine she can buy is given by:

Maximum bottles of wine = Income / Price of a bottle of wine
Maximum bottles of wine = P500 / P10
Maximum bottles of wine = 50 bottles of wine

Now, we can plot Khumo's budget line on a graph. The x-axis represents the number of movies and the y-axis represents the number of bottles of wine.

On the graph, plot the points (0, 50) and (50, 0). Connect these two points with a line to represent Khumo's budget line.

To shade in Khumo's budget set, we need to consider all possible combinations of movies and bottles of wine that Khumo can afford with her income.

The shaded area under the budget line and above the x-axis represents Khumo's budget set, which includes all possible combinations of movies and bottles of wine that she can afford to buy with her income.