Problem 1. A consumer consumes Food (F) and Clothing (C). She has a weekly income of $200. Food costs $1 per unit, and clothing costs $4 per unit. Draw her budget set. Label all slopes, intercepts, and any kinks. Put F on the horizontal axis.
Problem 2. Suppose the clothing store offers a 20% discount on every item of clothing purchased after the first 5, and a discount of 50% on every item of clothing purchased after the ?rst 10. Draw the consumer's budget set. Label all slopes, intercepts, and any kinks. Put F on the horizontal axis.
Problem 3. Forget the information in Question 2, and suppose someone who had 50 food stamps, each worth $1 of food, offered to sell this consumer their food stamps at a price of $0.65 per stamp (this consumer can buy any number, up to 50). Draw this consumer's new budget set. Label all slopes, intercepts, and any kinks. Put F on the horizontal axis.