A consumer must divide $600 between the consumption of product X and product Y.
The relevant market prices are Px = $10 and Py = $40. (LO2)
a. Write the equation for the consumer’s budget line.
b. Illustrate the consumer’s opportunity set in a carefully labeled diagram.
c. Show how the consumer’s opportunity set changes when the price of good X
increases to $20. How does this change alter the market rate of substitution between
goods X and Y?
