Higher Prices versus Lower Income. Recall the example of Maxine, who in January has an income of $30 and pays $3 per movie and $1 per book.
a. In February, the prices of movies and books double, but her income stays at $30. Draw her February budget line and shade her budget set.
b. In March, her income is cut in half to $15, but the price of books returns to $1 and the price of movies returns to $3. Draw her March budget line and shade her budget set.
c. Going from February to March, does her utility level increase, decrease, or stay the same? Explain.