1. Assume that Sophia has $1000 per month to spend between dinners at a Thai restaurant and evenings at MECA, a local club. Assume that going to MECA costs $200 and eating at the Thai restaurant costs $100.
i. Draw Sophia’s budget constraint. Restaurants on the Y axis.
ii. Assume that Sophia’s income rises and she can now spend $2000 per month. Draw her new budget constraint in relation to the old.
iii. Suppose the price of evenings at MECA increase to $400, while Sophia’s income and the price of the Thai restaurant is unchanged from part (i). Illustrate the new budget line in relation to the old
2.The market for chicken is shown below.
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