You have $60 to spend on food. You are interested in the nutritional content of the food, but you can't purchase carbs and proteins separately. You can buy steak and loaves of bread. You have the following price and nutrition information:
Steak costs $6 a pound and one pound has 12 grams of protein and 6 grams of carbs.
Loaves of bread costs $5 a pound and one pound has 5 grams of protein and 15 grams of carbs.
Given this information, answer the following questions.
a. Derive the absolute price of a gram of protein.
b. Derive the absolute price of a gram of carbs.
c. At what rate can you exchange a gram of protein for 1 gram of carbs? Explain clearly how you obtain this number and explain what determines it.
d. If you spend all your money on loaves of bread, how many grams of carbs will you consume? How many grams of protein will you consume?
e. If you spend all your money on steak, how many grams of carbs will you consume? How many grams of protein will you consume?
f. Derive the equation of the individual's budget constraint.
g. Draw the budget set. Make sure that you label all the relevant quantities.
Exercise 3.1 part f- please plot the budget constraint where x - axis = protein, and y-axis = carb (not steak and bread)
Please label equation(s) of the budget constraint.