Question

Q2.
Antonio buy 5 new college textbooks during his first year at school at the cost of $80
each. Used books cost only $50 each. When the bookstore announces that there will
10% increase in the price of new books and a 5% increase in the price of used books.
Antonio's father offers him $40 extra.
(a) What happens to Antonio's budget line? Illustrate the change with new books on the
vertical axis.
(b) Is Antonio worse or better off after the price change? Explain.

Answer 1

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