4.5. Maria's food and clothing consumption. Ten years ago, Maria had an income of 40 which she spent entirely on clothing (18 units) and food (22 units). Currently Maria has an income of 56 which she spends entirely on clothing (28 units) and food (14 units). Ten years ago,thepriceoffoodwaspf =1andthepriceofclothingwaspc =1. Today,thepriceoffoodispf =1.75,whereasthepriceofclothingis pc = 1.12.

(a) Plot Maria's choices on a graph with quantity of clothing on thee horizontal axis and quantity of food on the vertical axis. Indicate Maria's budget constraint in each period as well as her optimal choice.

(b) Suppose that Maria is a rational, utility maximizer. Comparing income levels, can we tell whether Maria is better off or worse off at time 2 than at time 1? Why or why not? (Hint: draw indifference curves that are consistent with A and B being optimal choices.)