Sarah consumes apples and oranges (the only foods he eats). He has decided that his monthly

budget for fruit will be $50. Suppose that one apple costs $0.25, while one orange costs $0.50.

a. What is the expression for Sarah's budget constraint?
b. Draw a graph of Sarah' budget line (also called his budget set).
c. Show graphically how Sarah's budget line changes if the price of apples increases to $0.50.
d. Show graphically how Sarah's budget line changes if the price of oranges decreases to $0.25.
e. Suppose Sarah decides to cut his monthly budget for fruit in half. Coincidentally, the next
time he goes to the grocery store, he learns that oranges and apples are on sale for half price
and will remain so for the next month. That is, the price of apples falls to $0.125 per apple and
the price of oranges falls to $0.25 per orange. What happens to both the expression of Sarah's
budget constraint and the graph of his budget line?

Please show all work.

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