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A new provincial government asks universities to reduce their tuition fees. a) Draw a hypothetical diagram...

A new provincial government asks universities to reduce their tuition fees.

  1. a) Draw a hypothetical diagram (no numbers) with university courses on the X axis to show the impact of this change on your budget constraint and on your optimal consumption bundle.

  2. b) The same government increases income taxes, while keeping tuition fees at the new low level. Redraw your graph and add the new budget line (again, we do not have any numerical values). Based on your graph, explain the impact of the last change on your utility.

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