2 Let P1 = $2 Be The Price Of Commodity 1 And P2 = $4 Be The Price Of Commodity 2. With Her Income, Bec Can Afford Bundle B = (6,5) Exactly, Hence She Would Spend All Her Income If She Buys Bundle B. (A) Calculate Bec's Income. Write The Equation Of Bec's Budget Line. (5p) (B) What Is The Slope Of Bec's Budget Line? (2p) (C) In A Diagram, Draw The Budget

 

2 Let p = $2 be the price of commodity 1 and p2 = $4 be the price of commodity 2. With her income, Bec can afford bundle B = (6,5) exactly, hence she would spend all her income if she buys bundle B. (a) Calculate Bec's income. Write the equation of Bec's budget line. (b) What is the slope of Bec's budget line? (5p) (2p) (c) In a diagram, draw the budget line of Bec and write down the coordinates of the points where the budget line cuts the horizontal and vertical axis. Label this budget line as BL. (3p) (d) Remember that Bec's utility function is U(x1, x2) = min{2x1, 3x2}. On the same diagram where you drew BL1, show Bec's optimal bundle. Call this optimal bundle, bundle X = (x1, x2). Draw the line that connects kinks of the indifference curves. Draw her indifference curve through X*. (6p) (e) Calculate the coordinates of X* = (x1, x2). (10p)