What is the relative price of a latte in terms of e-books and what is the opportunity cost of a latte? Draw a graph of Marc’s budget line with e-books on the x-axis.

Marc has a budget of $20 a month to spend on lattes and e-books. The price of a latte is $5, and the price of an e-book is $10. Figure 2 illustrates his preferences.

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FIGURE 2 Root beer (bottles per month) 4- 3- 2+ 0 1 = 2 2 3 4 DVDs (number per month)