[lmchien16]

1. Son has $150 to spend each week and cannot borrow money. He buys Malted Milk Balls and the composite good. Suppose that Malted Milk Balls cost $2.50 per bag and the composite good costs $1 unit.

a. Sketch Son’s budget constraint.
b. What is the opportunity cost, in terms of bags of Malted Milk Balls, of an additional unit of the composite good?
c. Suppose that in an inflationary period the price of Malted Milk Balls increases to $1.50 per unit, but the price of Malted Milk Balls remains the same. Answer the questions a and b.

2. Hung, a former actor, spends all his income attending plays and movies and likes plays exactly three times as much as he likes movies.

a. Draw his indifference map.
b. Hung earns $120 per week. If plays ticket costs $12 each and movie tickets cost $4 each, show his budget line and highest attainable indifference curve. How many plays will he see?
c. If play tickets cost $12, movie tickets cost $5, how many plays will he attend?


Help me, thank!