Draw nicholas budget constraint

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Econ 111: Principles of Economics - Accelerated Treatment - Quiz 3

a) Nicholas had $9 to spend on popcorn and soda at the movies last month. Popcorn costs $3 a bucket and soda $1 a glass. He bought 2 buckets of popcorn and 3 glasses of soda. Draw his budget constraint and show his opportunity set and equilibrium quantities.

b) His allowance is higher this month and he has $12 to spend on popcorn and soda. He bought 3 buckets of popcorn and 3 glasses of soda. Draw this new budget constraint, opportunity set and equilibrium quantities, if the prices of these two goods are still the same.

c) Is Nicholas happier or less happy with the new increased allowance (and higher consumption of popcorn and soda)? Why or why not?

Reference no: EM131093400

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