The price of DVDs​ (D) is ​$20.00 and the price of CDs​ (C) is ​$20.00. Katrina has a budget of ​$100.00 to spend on the two goods. Suppose that she has already bought 1 DVD and 1 CD. In​ addition, there are 3 more DVDs and 3 more CDs that she would really like to buy. ​1.) Using the line drawing​ tool, given the above prices and​ income, draw her budget line in the figure. Label this line​ 'L'.

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Revealed Preferences and Budget Constraint Analysis

Revealed means “Let Out,” and Preference means “Choice”; Choice Reveals Preference.