5. (15) In a two-year setting Reginald has an endowment (E) of $30 income this year (I1) and $24 next year (12). She can borrow or lend at an interest rate of 20%. She is currently borrowing. a. (5) Graph her budget line with endpoints (with form h formula) and year 2 on the x-axis. Mark her choice on the graph. Y1 Y 2 b. (2) What is the slope of the budget line? What is the interpretation of the slope? c. (3) Now the interest rate decreases to 0%. Graph her new budget line. d. (5) Does her borrowing increase or decrease or you cannot say? Explain logically using income and substitution effects. (You need not graph SE and IE, just use the logic, but you may graph if you prefer.) 6. (6) Market demand is Q(P) = 10.P-5 = 10/PS. Derive (points for each step) the elasticity of demand. Your solution should be only a number. Be sure to include the formula (2pts) and show each step