2. Spencer, an undergraduate student at UAB, receives money from his parents every month to spend on two possible goods: football tickets and books.

a. Sketch the budget constraint for Spencer (denote payment from parents as I, Prices PT and PB)

b. explain the condition whereby Spencer is maximizing his utility.

c. Suppose all books are marked 50% off. Show how this will affect Spencer's budget constraint

d. Use the condition from part (b) and your answer to part (c) to describe how the decrease in the price of books will affect Spencer's consumption of movies and books.

Now assume we know that Spencer receives $150 every month. Football tickets and books are both $25.

The following table shows the total amount of utility Spencer gets from a given number of each of the goods:

Units Football Tickets Books

0 0 0

1 50 35

2 90 65

3 115 78

4 135 88

5 153 95

6 168 99

e. How will Spencer allocate his income between football and books? Explain how you arrived at your answer.