Answer
a) Please see the graph.
b) The budget constraint doesn't change, and Jim's optimal consumption combination doesn't change.
Work Step by Step
a)
$100/2 =50$ quarts of milk (at most)
$100/4 = 25$ dozen cookies (at most)
b)
$100*1.1=110$
$2*1.1=2.2$
$4*1.1=4.4$
$110/2.2 =50$ quarts of milk (at most)
$110/4.4 = 25$ dozen cookies (at most)
Since the maximum quantities didn't change, the budget constraint doesn't change.
