1. For this question only, M = C+2. Suppose two individuals (Shania and Jelesha) each have 20 hours of labour to devote to producing either ice cream (X) or cake (Y). Shania's demand for X and Y is given by:

X_S = 15/P_X

Y_S = 5/P_Y

Whereas Jelesha's demands are given by

X_J = (20-M)/P_X

Y_J = M/P_Y

The individuals do not care whether they produce X or Y and the production function for each good is given by X = 4L; Y = 5L where L is the total labour devoted to the production of each good. The equation for the frontier is given by X/4 + Y/5 =40. Using this information, answer the following.

1. What must the price ratio, P_X/P_Y be? [1 mark]
2. What is the value for P_Y? [2 marks]
3. What is the value for P_X? [1 mark]
4. How much of X will be demanded? [1 mark]
5. How much of Y will be demanded? [1 mark]
6. How should labour be allocated between the production of ice-cream and the production of cake to satisfy the demand calculated above? [1 mark]

whereby A=19, B= 745, C= 5 AND D=53