Assume you won $ 30 on a lottery ticket and decided to spend all the winnings on candy

bars and bags of peanuts. The price of candy bars is $0.75 and price of peanuts is $1.50.

a. Construct a table showing the alternative combinations of the two products that are

available.

b. Plot the data in your table as a budget line in a graph. What is the slope of the budget line?

What is the opportunity cost of one more candy bar? Of one more bag of peanuts? Do

these opportunity cost rise, fall or remain constant as each additional unit of the product is

purchased?

c. Does the Indifference curve tell you which of the available combinations of candy bars and

bags of peanuts to buy? Explain it logically.

d. Suppose that you had won $60 on your ticket, not $30 show the $ 30 budget line in your

diagram. Has the number of available combinations increased or decreased? Explain it.