Brian works in a factory and spends his monthly income on Beer and Pizza.

Microsoft Word - Econ 104A Homework 2.docx

For all of the following situations, draw Brian's budget set and label the axes and intercepts.

Calculate the slope of the budget line.

1. Brian's monthly income is $100. The price of beer is $2 and the price of pizza is $4.
2. The price of beer increases to $2.5 and other things doesn't change.
3. The government wants to discourage people from alcohol, so they raise the price of beer to $2.5 if you buy 10 or more than 10 beer. The price of beer remain $2 if you buy less than 10. Other things doesn't change.
4. Brian has a pay raise. Now his monthly income is $150. The prices of beer and pizza doesn't change.