Question

Budget constraint 1 is faced when price food = 10 and price clothing = 5. Budget constraint 2 is faced when
pfood = 40/7 and pclothing = 10. The income is 100 for both budget constraints. Draw both budget
constraints. Next, draw the following four consumption bundles in your graph: The consumer chooses
consumption bundle A = (3, 14) when faced with budget constraint 1. If the consumer faces budget constraint
2, she chooses bundle B = (7, 6). In addition, mark two other bundles as well: C = (14, 2) and
D = (15, 9). Describes the consumer’s preferences (first is highest ranked and last is lowest ranked) for the
four consumption bundles. Indicate any issue you might face ranking those bundles.