Roy has preferences for laptops (L), and drones (D). Laptops costs $750 a unit and drones costs $2000 a unit. Roy has $15000 to spend on both goods. Give the equation for Roy’s budget line. If drones are on the vertical axis, what is the slope of the budget line? Roy is a utility maximizer. Describe the utility maximization condition. Using the available information at what value is utility expected to be maximized. “Drones are Roy’s favorite electronic therefore the law of diminishing marginal does not apply”. Do you agree with this statement? It is known that the indifference curve is convex. What does this tell you about the relationship between the goods?

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