Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 13

You are looking for a new apartment in Manhattan. Your income is $4,000 per month, and you know that you should not spend more than 25 percent of your income on rent. You have come across the following listing for one-bedroom apartments on craigslist. You are indifferent about location, and transportation costs are the same to each neighborhood.

a. Which apartments fall within your budget? (Check all that apply.) b. Suppose that you adhere to the 25 percent guideline but also receive a $1,000 cost-of-living supplement since you are living and working in Manhattan. Which apartments fall within your budget now?