Question: Cindy consumes two goods: x and y. her initial endowment is composed of 3 units of x and 5 units of y. In addition, she

Cindy consumes two goods: x and y. her initial endowment is composed of 3 units of x and 5

units of y. In addition, she owns $ 700. We also know that px = 100 and py = 200.

a) Calculate the total value of everything she owns.

b) Write the equation for its budget line.

c) Draw this budget line (with the good x on the horizontal axis, and the good y on the

vertical), and clearly indicate on the graph the basket representing its initial endowment

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