Question: (20 points) There are two commodities. We are given two budget sets, Bpoyo and Bpin, described respectively by p' = (1, 1), / = 8

(20 points) There are two commodities. We are given two budget sets, Bpoyo and Bpin, described respectively by p' = (1, 1), / = 8 and p = (1,4), / = 26. The observed choice at (p), I') is x0 = (4,4). At (p], I'), we have a choice x such that p. x = /. (a) Determine on a diagram the region of permissible choices x' if the choices x" and x' are consistent with maximization of preferences that are non-satiated. (b) Determine on a diagram the region of permissible choices x' if the choices x and x are consistent with maximization of preferences for which both goods are normal
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