Jerry lives on milk and cereal. He spends all his income on 40 units of milk and 30 units of cereal. The price of milk is $3 and the price of cereal is $4. 

a) Draw Jerry's budget line and clearly label its slope, vertical intercept, and horizontal intercept. Indicate Jerry's budget set. (8 points) 

b) Write down the equation corresponding to Jerry's budget line. (4 points) c) Suppose the price of milk has risen to $4 and the price of cereal remains the same. How much would Jerry's income have to rise so that he can afford all the consumption bundles that used to be affordable? (4 points)