Question 1: Mike's budget for fast-food meals and CDs is $100 per week. The price of a fast-food meal is $5 and the price of a CD is $10.

I) Write down Mike's budget line. [Hint: ]

II) Write down Mike's new budget line if:

(1) Mike's budget increases from $100 to $200 per week.

(2) Mike's budget decreases from $100 to $50 per week.

(3) The price of a fast-food meal rises from $5 to $10.

(4) The price of a CD falls to $5.

Question 2: Jerry's burger and magazine budget is $12 a week. The price of a burger is $2, and the price of a magazine is $4.

I) Write down Jerry's budget line.

II) Fill in the blanks in Table 1.

Table 1. The possible combinations of burgers and magazines that Jerry can afford

Possible combinations. Number of burgers. Number of magazines

A 3

B 2

C 1

D 0

III) Draw a graph of Jerry's budget line with the quantity of magazines plotted on the horizontal axis and the quantity of burgers plotted on the vertical axis.

If Jerry's burger and magazine budget rises, other things remaining the same, his budget line shifts to which direction?

Question 3: Original budget line is , where the price of meals is $5, the price of CDs is $10, and the (disposable) income is $100.

[The original budget line is .]

Please write down the new budget line if

I) Income rises to $200.

II) Income falls to $50.

III) The price of meals becomes $10.

IV) The price of CDs becomes $5.

V) The price of meals becomes $10 and the price of CDs becomes $5 simultaneously.

VI) The price of meals becomes $10 and the (disposable) income becomes $200.