Gregorian and Boudicca each have incomes of $30 and each shop at Star Market, where apples cost $2 each and bananas cost $1 each. Every day, Gregorian buys 6 apples and 18 bananas, and so does Boudicca. One day a new supermarket (called Acme) opens up. At Acme, apples cost $1 and bananas cost $2. Gregorian prefers to keep shopping at Star Market, but Boudicca switches to Acme.
a. Draw a diagram showing Gregorian's budget lines at Star Market and Acme. Illustrate his indifference curves. Do the same for Boudicca.
b. What is the key difference between the shapes of Gregorian's and Boudicca's indifference curves?
c. True or False: At Acme, Boudicca will surely buy more than 10 apples.
d. The president of Star Market Points out that at Acme, Boudicca will no longer be able to afford the basket she's been buying at Star Market. Is this a good reason for Boudicca to reconsider her choice?