Problem
Josie gets satisfaction from both music and fireworks. Josie's income is $240 per week. Music costs $12 per CD, and fireworks cost $8 per bag.
a. Graph the budget constraint Josie faces, with music on the vertical axis and fireworks on the horizontal axis.
b. If Josie spends all her income on music, how much music can she afford? Plot a point that illustrates this scenario.
c. If Josie spends all her income on fireworks, how many bags of fireworks can she afford? Plot a point that illustrates this scenario.
d. If Josie spends half her income on fireworks and half her income on music, how much of each can she afford? Plot a point that illustrates this scenario.
e. Connect the dots to create Josie's budget constraint. What is the slope of the budget constraint?
f. Divide the price of fireworks by the price of music. Have you seen this number before, and if so, where?
g. Suppose that a holiday bonus raises Josie's income temporarily to $360. Draw Josie's new budget constraint. h. Indicate the new bundles of music and fireworks that are feasible, given Josie's new income.
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.