Mary has two dinner options available: eating a home cooked meal for $150 per meal, or at a restaurant for $260 per meal. Her weekly budget is $2500. Draw Mary’s budget constraint, (put home cooked meal on the horizontal axis) showing the trade-off between a home cooked meal and eating at a restaurant.   Draw an indifference curve showing the optimum choice. Label the optimum as point A.

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Revealed Preferences and Budget Constraint Analysis

Revealed means “Let Out,” and Preference means “Choice”; Choice Reveals Preference.