Sara's I = $90/week and she spends it all on goods x and y.

p_y= $1 p_x = $5 for purchases of x up to 15 units, and $0.20 for each unit of x purchased beyond 15.

Her utility function is represented by the following: U = x^0.5y^0.5 .

1. Draw Sara's budget constraint (BC) with y on the vertical axis and x on the horizontal axis (you should find that it has two connected linear segments).

1. It's possible for Sara to have 2 optimal bundles, call them A and B. What are x_A*, y_A* and x_B*, y_B*? (Hint, you should find both the indifference curves and budget constraint symmetric about the 45 degree line out from the origin, so I'd expect symmetry across the bundles. Pretend like each segment of the "kinked" budget line is a separate constrained utility maximization problem.) Show the optimal bundles on the budget constraint in part a. Draw in what you think the highest affordable indifference curves would look like.