Claudio Audio has $1000 which he can spend on either CD players or CDs. He cannot play his CDs without the CD player, but additional CD players don't make him any happier, since he can listen to only one at a time. CD players cost $400 each; and CDs cost $10 each.

1. Write down the equation for Claudio's budget line.
2. Describe in words and math Claudio'sconsumer problem.
3. Sketch in Claudio's indifference curves, with CD players on the horizontal axis.
4. Can you figure out from the information given what the equilibrium will be?