A consumer has income of €3000. Bread is priced at €3 a loaf and cheese is priced at €6 a kilo. a. Draw the consumer’s budget constraint. What is the slope of this budget constraint? b. Draw a...

A consumer has income of €3000. Bread is priced at €3 a

loaf and cheese is priced at €6 a kilo.

a. Draw the consumer’s budget constraint. What is the

slope of this budget constraint?

b. Draw a consumer’s indifference curves for wine and

cheese. Pick a point on an indifference curve for wine

and cheese and show the marginal rate of substitution.

What does the marginal rate of substitution tell us?