Refer to the following graph Assuming that this consumer has

Refer to the following graph:

Assuming that this consumer has $160 to spend on Juice and Snacks, identify three price quantity combinations that lie on the consumer’s demand curve for snacks.

Solution

The consumer has income =160

First budget line

Since he consumes 10 unit of snacks and 0 unit of juice,so price of snack will be=160/10

=$10

Similarly price for the second budget line will be;

Price=160/20

=8

Similarly price of budget line 3=160/40

Price=4

These prices and quantity combination lies on demand curve of snacks.