Draw the budget constraint of a student

Reference no: EM13682235

Q6. The Students Union introduces the following scheme: Students can buy a Caffeine Addict card for $50, which entitles them to a 25% discount on the price of coffee sold at the cafeteria. With coffee on the horizontal axis and income on the vertical,
(i) Draw the budget constraint of a student who buys such a card before and after the scheme is introduced.
(ii) On a separate diagram, show the equilibrium of a student who is indifferent between buying the card or paying the standard price.

Reference no: EM13682235

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