Andre has a salary of $1000. He spends his entire budget on shoes and beers.  The cost for a pair of shoes is $15 and the cost for can of beer is $25.  i. Construct Andre’s budget constraint (place) beers on the y-axis.  Suppose Andre’s salary rises by 25%. Also suppose that the price of  shoes and beers each rise by 40%. Construct Andre’s new budget  constraint. What is the difference between the new and old budget  constraints? iii. Suppose that the price of beers fell from $25 per beer to $15. Construct  Andre’s new budget constraint. What is the difference between the new  and old budget constraints.

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