Budget Line and Indifference Curves Problem

Question:

Monica has been considering buying a mountain bike. Last month Monica had an income of $30,000. The bike’s price was $1000, the composite good price was $1, and she decided not to buy the bike.  This month Monica was surprised to get a $10,000 increase in income. The prices of the bike and the composite good are the same, but now Monica decides to buy the bike. Draw a budget line and indifference curves to illustrate this situation. Be sure to label you diagram completely. 

Summary:

A case study where Monica considers buying a mountain bike. The differences in her income for the last two months are given. Budget line and indifference curves are drawn.

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    Monik


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