How should sam adjust his consumption

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Reference no: EM13214420

Sam and Julie are talking about how much they like going to the fitness and how much they like eating out at their favorite restaurant. A session at the fitness costs the same as a meal at the restaurant. Sam says that, for his current consumption of gym sessions and restaurant meals, he values one more meal twice as much as he values one more session at the fitness. Julie is studying economics, and she tells him that he cannot be choosing his optimal consumption bundle.

a) Is Julie right? why or why not? Draw a diagram of Sam's budget line and the indifference curve that he on by making his current consumption choice. Place restaurant meals on the horizontal axis and fitness sessions on the vertical axis.

b) How should Sam adjust his consumption so that it is optimal?

Reference no: EM13214420

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