There are two goods you consider spending your money each month. You can buy a t-shirt which costs $10 and you can go to a movie for $12.50. Your monthly income is $100.

c. [3 pts] Imagine the price of a movie decreases from $12.5 to $8. Show how this affects your optimal choice between t-shirts and meals. (Assume the substitution effect dominates) d. [2 pts] Graphically show how to derive the demand curve for t-shirts. Make sure you label important points clearly. 2