Saron spends 150 birr per month on coffee and cake at the cafeteria. A cup of coffee costs 15 birr and a cake costs 10 birr. a) Write the equation for Saron’s cafeteria budget constraint and draw it in a diagram. b) Assume that Saron never drinks coffee without eating one cake, and never eats cakes without drinking coffee. How much of each will she consume? Draw some of her indifference curves. c) What do we call goods that are always consumed in the same proportion?

/in /by

Saron spends 150 birr per month on coffee and cake at the
cafeteria. A cup of coffee costs 15 birr and a cake costs 10 birr.

a) Write the equation for Saron’s cafeteria budget constraint and
draw it in a diagram.

b) Assume that Saron never drinks coffee without eating one cake,
and never eats cakes without drinking coffee. How much of each will
she consume? Draw some of her indifference curves.

c) What do we call goods that are always consumed in the same
proportion?

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