3.1. Paul derives utility only from CDs and DVDs. His utility function is U-VC.D
3.1.1. Suppose Paul has R200 to spend and that CDs cost R5 and DVDs cost R20. Draw Paul's
budget constraint on the same graph as his
indifference curves
3.1.4. Show that Paul's income will not permit him to reach the U-20 indifference curve (3)
3.2.Explain what microeconomics is?
3.1.2. Sketch Paul's indifference curves for U= 5, U-10, and U-20 in the same graph. (6)
3.1.3. Suppose Paul spends all of his income on DVDs. How many can he buy and what is his
utility?
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