Draw the budget line to scale, with cappuccinos

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Cappuccinos, C, cost $3 each, and music downloads of your favourite artist, M, cost $1 each from your iTunes store. Income is $24.

(a) Draw the budget line to scale, with cappuccinos on the vertical axis, and compute its slope.

(b) If the price of cappuccinos rises to $4, compute the new slope.

(c) At the initial set of prices, are the following combinations of goods in the affordable set: (4C and 9M), (6C and 2M), (3C and 15M)?

(d) Which combination(s) in part (c) lie inside the affordable set, and which lie on the boundary?

Reference no: EM131072551

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