Question
Davante finally sees a room for rent that is 100 square feet. He is exactly indifferent between renting it and spending his remaining income on
Davante finally sees a room for rent that is 100 square feet. He is exactly indifferent between renting it and spending his remaining income on food and renting the 900-square-foot apartment. On the graph below, plot the three bundles you have just identified (with 900, 300, and 100 square feet of housing, respectively). Then use the curved-line tool to plot an indifference curve through those three points (while such a curve in theory extends beyond the points given, for this exercise simply plot the curve in between the points you have). It should be evident that Davante is not maximizing his utility at any of the three points you have plotted. Using the straight-line tool, draw a line that will highlight all the points on the budget line that give Davante higher utility than the three points already graphed.
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