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This is my questions II. PROBLEMS Problem 1 (30 pts) Explain your answers! In Spring 2020 Gary consumed two goods: packs of toilet paper (with

This is my questions

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II. PROBLEMS Problem 1 (30 pts) Explain your answers! In Spring 2020 Gary consumed two goods: packs of toilet paper (with quantity denoted by t) and 'dollars spent on everything else' (quantity denoted by e). (a) Suppose a pack of toilet paper costs $6 and Gary's income is m = $60. Write down Gary's budget constraint and plot his budget set and budget line (put t on the horizontal axis, as good 1). Label the axes, intercepts and everything else carefully. Find the slope of the budget line. The following applies for parts (b)-(d). Now suppose that there are only two stores Gary could go to - Costco and Save on Foods. Save on Foods allows each customer to purchase maximum 2 packs of toilet paper, at $6 each. Costco sells packs of toilet paper for $5 each but only if a customer spends at least $30 on everything else (no toiled paper can be bought otherwise). Gary's income is still $60. (b) Plot Gary's budget line if he goes to Costco. On the same graph, plot his budget line if he goes to Save on Foods instead. (c) Can Gary buy the bundle (5, 30) (5 toilet paper packs and $30 spent on everything else) from Save on Foods? How about from Costco? Explain why or why not. (d) Are there valid preferences for Gary (plot an example indifference curve) so that he would rather go to Save on Foods instead of Costco? Explain why or why not

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