Question

Lily wants to maximize her benefit of consuming apples and bananas, given her fixed budget of $10 for these two fruits. The price of an apple is $1, and the price of a banana is $0.50. In order to derive Lily's demand curve for bananas, we need to ________. a. draw a downward sloping line with slope of -1 b. draw a downward sloping line with slope of -2 c. solve the buyer's problem for her multiple times and find the optimal number of bananas, when price of a bananas is at a different level each time d. solve the buyer's problem for her once, and find the optimal number of bananas, when price of a bananas is $0.50

Answer 1

In order to derive Lily's demand curve for bananas, we need to solve the buyer's problem for her multiple times and find the optimal number of bananas, when price of a bananas is at a different level each time.

Explanation:

The demand curve is an intractable economic diagram that indicates the connection between an overall market demand for commodity quantity and market price.

The market demand graph is the convergence of all private market demand curves. This indicates the quantity expected by all people at different prices. For eg, the quantity expected by all advertisers at 10 dollars per day is 150 lattes.