Economics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 1

Maria has a $300 gift certificate at a spa that she can use on massages or manicures. A massage costs $100, and a manicure costs $30.
a. Write the equation for Maria's budget constraint. Let x = massages. Let y = manicures.
b. Suppose Maria decides to split her gift certificate with a friend and transfers half of the value of her gift certificate to her friend. Write the equation for her new budget constraint.
c. After giving away half of her gift certificate, suppose the price of massages increases by 50 percent before Maria can use her gift certificate. Write the equation for her new budget constraint.