Princess Kasumi
New member
An individual earns an income and spends it on two goods X and Y. As part of an inheritance, he is now entitled to an annuity of Xn units of x and Yn units of y every year.
a) Draw and explain the individual's budget line before and after his inheritance entitlement assuming that it has been stipulated that he cannot transfer, or trade in his annuity.
b) Draw and explain the individual's budget line when he can trade in his annuity. Will it make a difference if he can or cannot trade in his annuity?
a) Draw and explain the individual's budget line before and after his inheritance entitlement assuming that it has been stipulated that he cannot transfer, or trade in his annuity.
b) Draw and explain the individual's budget line when he can trade in his annuity. Will it make a difference if he can or cannot trade in his annuity?