NOTE: THIS IS FOR A NON-GRADED QUIZ.

Louis has stable preferences and consumes two goods, wine and cheese.In 1994, the price of wine was $4/glass and the price of cheese was $2/ounce.Louis's income was $60 and he bought 12 glasses of wine and 6 ounces of cheese.In 1995, wine costs $2/glass and cheese costs $4/ounce.Louis's income is still $60.

a.Draw both years' budget lines.Where do they cross?

b.What is Louis's marginal rate of substitution of wine for cheese in 1994? [hint: you can't use calculus]

c. True or false. Explain carefully.In 1995, Louis will definitely not buy exactly 10 glasses of wine.