Solved: Now suppose the price of coffee drops to 1nbspwill billie, Macroeconomics

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Now suppose the price of coffee drops to 1nbspwill billie

Ben enjoys coffee (C) and tea (T) according to the function U = (C, T) = c+t . The price of coffee is $2 and the price of tea is $1.

If Ben's income is $4, how much coffee and tea will she buy? Draw a graph of Billie's indifference curves and budget constraint in this situation and show how to use the graph to answer this question.
Now suppose the price of coffee drops to $1. Will Billie be better off? How much coffee and tea will she buy now? What does the diagram now look like?

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Macroeconomics: Now suppose the price of coffee drops to 1nbspwill billie

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