A consumers budget set for two goods (X and Y) is 500 2X + 4Y. a.

Question:

A consumer’s budget set for two goods (X and Y) is 500 ≥ 2X + 4Y.
a. Illustrate the budget set in a diagram.
b. Does the budget set change if the prices of both goods double and the consumer’s income also doubles? Explain.
c. Given the equation for the budget set, can you determine the prices of the two goods? The consumer’s income? Explain.