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Unformatted text preview: a. (4) Draw Margie’s budget constraints both if she buys the membership and if she does not. b. (1) Will her budget line with the membership lie above, lie below, or pass through her initial optimum (10 books)? Explain your answer. c. (3) Determine whether Margie will buy the membership or not. Explain your answer. (Add indifference curves on the diagram from part “a” if needed.) d. (2) If Margie decides to buy the membership, what will be her MRS (i.e. marginal value of a book) at her NEW optimal bundle?...
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- Spring '12