Suppose that students only buy two goods: (i) Textbooks and (ii) Pens. The cost of a Textbook is $80 each. The cost of a pen is $4 each. Suppose that students have $600 to spend. 1. Draw the budget constraint for this problem. For full credit, be sure to label the y-intercept and x-intercept. Draw this with textbooks on the x-axis and pens on the y-axis

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Revealed Preferences and Budget Constraint Analysis

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