Question: 7. A consumers consumption set is given by C = {(XI.X2) 3X: _>_ 0-K: 2 0} and her budget set is given by B =

7. A consumer’s consumption set is given by C = {(XI.X2) 3X: _>_ 0-K: 2 0} and her budget set is given by B = {(x.,x2) 1 PIXI + P2X2 E M] where x1 and x2 are quantities of goods, p], [)2 > 0 are prices, and M > 0 is income. Illustrate in a diagram the sets

(a) B, C

(b) B U C

(c) B D C and interpret each of these.

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