Nick has $300 a month to spend on detailing his sports car or buying bottles of good wine.It costs $100 to have his car detailed and $50 for a bottle of wine.He currently buys four bottles of wine and has his car detailed once a month.If the price of detailing his car decreased to $75,Nick's budget constraint:

Question

Quizplus · Accepted Answer

Nick's budget constraint is currently represented by the equation:
$300 = $100 + $50(4) 
Simplifying we get,
$300 = $300
Now, if the price of detailing decreases to $75, the equation becomes:
$300 = $75 + $50(4)
Simplifying we get,
$300 = $500
The budget constraint rotates and changes slope because the relative prices have changed. Nick can now afford to buy more bottles of wine or have his car detailed more frequently, or some combination of both.

Nick Has $300 a Month to Spend on Detailing His