A consumer must divide $250 between the consumption of product X and product Y. The relevant market prices are Px = $5 and Py = $10.
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 $10. How does this change alter the market rate of substitution between goods X and Y?