Assignment 2
1. The price of tapes is $10 and the price of CDs is $15. Philip has a budget of $100 and has already purchased 3 tapes. He thus has $70 more to spend on additional tapes and CDs.
a. Draw his budget line.
b. If his remaining expenditure is made on 1 tape and 4CDs,
i. Show Philip’s consumption choice on the budget line.
ii. Draw a set of indifference curves (indifference map) for Philip.
2.