Question 1. Chapter 3. Deriving individual demand functions.

Elizabeth makes $200 a week at her summer job and spends her entire weekly income on new running shoes and designer jeans, because these are the only two items that provide utility to her. Furthermore, Elizabeth insists that for every pair of jeans she buys, she must also buy a pair of shoes (without the shoes, the new jeans are worthless). Therefore, she buys the same number of pairs of shoes and jeans in any given week. (Solve the question planning to plot jeans in the y- axis and shoes in x-axis.)

1. (10 pt.) if jeans cost $20 and shoes cost $20, how many will Elizabeth buy of each?
2. (5 pt.)show your results by graphing the budget constraint and the indifference curve
3. (15 pt.) derive elizabeths demand function for jeans
4. (10 pt.) suppose that her income rises to $300. what will her new demand function be?
5. (10 pt.) Show a graphical representation of the demand functions in part c and d on the same.