The question is from Busi 100 Micro Foundations of Real Estate Economics

7. You are responsible for investing a budget of $6 million into a portfolio of apartments (y) and detached houses (x). Your market research shows that each apartment is selling for $200,000 and each detached house is selling for $600,000. (a) Draw a budget constraint line for this portfolio. (3 marks) (b) Using your ndings from part (a), demonstrate how the budget constraint line will change if the budget for the portfolio increases to $9 million. (2 marks) (c) Demonstrate how the original budget constraint from part (a) changes when the price of apartments decreases to $100,000. (2 marks) (d) Demonstrate how your original budget constraint from part (a) changes when the price of a detached house increases to $1,000,000. (2 marks) 8. (a) Draw indifference curves that reect the following preferences and briey explain your diagrams: (i) Pencils with white erasers and pencils with pink erasers (2 marks) (ii) Left shoes and right shoes (2 marks) (iii) Potatoes and rice (2 marks) (b) For each of the preferences above, state whether the preference meets the four properties of most indifference curves, as explained in the course textbook. If it violates one or more of the properties, explain with specic reference to the properties of indifference curves. (6 marks)