Gowri has $6 per day to purchase lunch. She spends all of her lunch money on pizza and iced-tea. The price of pizza is $2.00 per slice and iced-tea costs $1 per bottle.

a. Draw Gowri's budget constraint and label it BC₀. Put pizza on the horizontal axis and iced-tea on the vertical axis. Be sure to identify the intercept values.

b. If the price of iced-tea rises to $1.20 per bottle, show what will happen to her budget constraint in your diagram. Be sure to indicate any new intercept values.

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a To draw Gowris budget constraint BC0 with pizza on the horizontal axis and icedtea on the vertical ... View the full answer