Question: Can you do this for me please 2a) Suppose a consumer has a daily income of $48 and purchases just two goods, A and B.
Can you do this for me please
2a) Suppose a consumer has a daily income of $48 and purchases just two goods, A and B. The price of A is $8 and the price of B is $6. In the space provided below, draw the budget line for this consumer. On the budget diagram, draw an indifference curve that would represent the maximum level of utility that can be achieved.
(4 Marks)
- If this consumer increased their daily income to $72, what would be the impact on the budget line? (2 marks)
- If there was no increase in daily income (budget remains at $48), but the price of B increased from $6 to $8, what would be the impact on the budget line? (2 marks)
- On the graph in part a), would the indifference curve still represent maximum utility given the change describe in part b)? Explain. (2 marks)
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