Sheila Can Watch as Many Television Programs as She Wants

question 129

Essay

Sheila can watch as many television programs as she wants for free, but she must pay $2 for each video she rents. Draw Sheila's budget line for t.v. shows (T) and videos (V), and identify the set of affordable bundles (be sure to label the axes). At a particular point on Sheila's budget line, her MRS is 1T/2V. Illustrate this situation on your diagram. Has Sheila maximized her satisfaction at this point? If not, identify a change in consumption that will make her better off. Describe her preferences when satisfaction is maximized.

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Definitions:

British Parliament

The supreme legislative body in the United Kingdom, consisting of two houses: the House of Commons and the House of Lords.

Port Of Charleston

A significant seaport in Charleston, South Carolina, with a rich history of trade, immigration, and military strategic importance in the United States.

Natural Rights

Rights that individuals are born with, which are not contingent upon laws, customs, or beliefs, often including the right to life, liberty, and property.

American Revolution

The period (1765-1783) during which thirteen of Britain's North American colonies successfully fought for their independence to become the United States of America.