M01 broo6651 1e sg c01


there are 3 more DVDs and 5 more CDs that he would really like to buy



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Ch03
sol 03, sol 03, Ch07
there are 3 more DVDs and 5 more CDs that he would really like to buy.
a. Given the above prices and income, draw his budget line on a graph with CDs on the
horizontal axis.
His budget line is


D
C
P DP CI i, or 20D  10C  100. If he spends his entire income on DVDs he can afford to buy 5. If he spends his entire income on CDs he can afford to buy 10. His budget line is linear with these two points as intercepts.
b. Considering what he has already purchased and what he still wants to purchase, identify the
three different bundles of CDs and DVDs that he could choose. For this part of the question,

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