Identify the point of consumer equilibrium and label it X. Mark the original consumption levels for both goods. (Circle one) Which good is higher in price, a) wool or b) lamb chops? Explain briefly. I. Wool 2. 3. Say the consumer's income rises by 20%. Draw the resulting new budget line and label it B'B'. Draw a new indifference curve, labeled IC2, such that it includes the new consumer equilibrium, and label that point Y. 4. Show the effect of this change on the consumption levels of the two goods. IC Lamb chops  

Transcribed Image Text:

1 Wool KC Lamb chops 1 Wool KC Lamb chops