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3. Shawn has a monthly income of $3,000 and pays $1.500 per month to rent a 500 square foot apartment. Shawn's preferences are defined over
3. Shawn has a monthly income of $3,000 and pays $1.500 per month to rent a 500 square foot apartment. Shawn's preferences are defined over apartment size and a bundle of other consumption goods priced at $1 per unit. Answer the following questions assuming that all other apartment qualities and costs are irrelevant. (a) Calculate the price per square foot of housing and draw Shawn's budget constraint in a clearly labelled graph. Then clearly mark the point on your graph depicting Shawn's consumption bundle. Label the budget constraint Bi and make sure to label your axes, both intercepts of the budget constraint, and the quantities of each good Shawn consumes. The government introduces a housing support program that offers Shawn a $100 voucher to spend on housing, but requires finding an apartment larger than 750 square feet. Shawn must forgo housing support to choose an apartment smaller than 750 square feet. (b) In the same graph as before, draw Shawn's budget constraint if they choose to join the housing support program. Label this constraint B2. (c) Shawn chooses not to join the housing support program. Is it possible that this decision is rational? Explain why or why not. A complete answer will draw a single indifference curve that both rationalizes Shawn's choice and supports your argument
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