Sam arrived on campus at the beginning of the academic year with $480 to spend on textbooks and CDs. The price of a textbook is uniformly $80 and the price of a CD is always $20. Her parents made a deal with her - after Sam spends $240 of her own money on textbooks, her
parents would split the cost of any additional textbooks with her.
a. Draw Sam's budget constraint. Label the y- and x- intercepts. (Please put CDs on x-axis.)
b. At what point does her budget constraint "kink"? What is the slope of the budget constraint to the left and right of the kink point?