Rumi has $100 and is deciding how to spend it on bread and wine. The price of bread is $2 and the price of wine is $2. (Both goods are infinitely divisible.)

Suppose the government wants consumers to conserve bread, so it increases the price of bread to $4 for each additional loaf over 25 loaves. In other words, 26 loaves of bread will cost a consumer225+14=$54 .

Draw the budget constraint. What is the area under the new budget constraint?

(Note: We don't ascribe any intuitive meaning to this value. It is just a way to check that you have constructed the constraint correctly.)