Jordan is a college student who receives a stipend of $1000 a month. He uses the stipend to pay rent for housing and to go to the movies. (Assume all other expenses have been paid). Each square foot of rental housing is $1.50/month. Each movie he sees is $10. (Think of sq ft. housing as x1 and movies as x2)
a) what is the expression for Jordan's budget constraint
b) draw a graph of the budget constraint
c) what is the max number of sq ft of housing he can purchase given the stipend?
d) What is the max number of movies he could buy?
e) If the price of movies increases to $12 and price of rental increases to $2 per sq ft, what happens to the budget constraint? Draw this new budget constraint on your graph.