Daniel is a diligent student who loves getting as, but he also loves watching movies. Daniel is awake for 100 hours each week, and studying and watching movies are his only two activities. Daniel must study for 20 hours per week for each a he earns. Each movie is 2 hours long.

a. Draw Daniel’s budget constraint that shows the trade-off between the numbers of as he can receive and the number of movies he can watch. Assuming that he is happiest when he earns three as, draw an indifference curve that marks his optimal choice of studying and movie watching. How many movies does he watch each week?

With a new semester beginning, Daniel decides to get his difficult requirements out of the way. Each class now requires him to study for 25 hours per week to get an A.

b. Draw the new budget constraint on your graph. Show one possible outcome on your diagram. How will the relative strengths of the income and substitution effects determine whether Daniel makes better or worse grades and whether he watches more or fewer movies?