Use the Indifference Curve Model attached to answer the next set of questions.

A consumer is in equilibrium at Point A in Figure 1.The price of good X is $30.

a. What is the consumer's income?

b. What is the price of Product Y?

c. At point A, how many units of Product X does the consumer purchase?

Suppose the budget line changes so that the same consumer achieves a new equilibrium at Point B.

d. What is the new price of Product Y?

e. At point B, how many units of Product X does the consumer purchase?

f. Comparing the number of units of Product X at point B compared to point A, what is the relationship between

products X and Y?Are they complements, substitutes or neutral goods?

g. Explain whether the consumer is better off or worse off as a result of the price change.You must clearly state

that the consumer is either "better off" or "worse off" in your answer.

h. The income effect and substitution effect operate in opposite directions with respect to the amount of product X

that is purchased.Which is the dominant effect in Figure 1:Substitution or Income?

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