Problem
Kathy, a college student, has $20 a week to spend; she spends it either on junk food at $2.50 a snack, or on gasoline at $2 per gallon. Draw Kathy's opportunity set. What is the trade-off between junk food and gasoline? Now draw each new budget constraint she would face if
(a) a kind relative started sending her an additional $10 per week;
(b) the price of a junk food snack fell to $2;
(c) the price of gasoline rose to $2.50 per gallon. In each case, how does the trade-off between junk food and gasoline change?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.