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A Consumer Must Divide $600 Between The Consumption Of Product X And Product Y

01/04/2020 Client: jessical Deadline: 2 Day

A consumer must divide $600 between the consumption of product X and product Y. The relevant market prices are Px = $10 and Py = $40.


 a. Write the equation for the consumer’s budget line.



 Y = [removed]+ [removed]X


 b. In the graph below, illustrate the consumer’s opportunity set. Show as graficly



c. In the same graph, Illustrate the consumer’s opportunity set when the price of good X increases to $20.




 How does this change alter the market rate of substitution between goods X and Y?


It changes from -2 to -4.


It changes from -0.5 to -0.25.


It changes from -0.25 to -0.5.


It changes from -4 to -2.

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