What is market rate of substitution between goods x and y

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A consumer has 400 to spend on goods X and Y. The market prices of these two goods are Px = $10 and Py = $40. a. What is the market rate of substitution between goods X and Y? b. Illustrate the consumer's opportunity set in a carefully labeled diagram c. Show how the consumer's opportunity set changes if income increases by $400. How does the $400 increase in income alter the market rate of substitution between goods X and Y? Question 2. A consumer is in equilibrium at point A in the accompanying figure. The price of good X is $5. a. What is the price of good Y? b. What is the consumer's income? c. At point A, how many units of good X does the consumer purchase? d. Suppose the budget line changes so that the consumer achieves a new equilibrium at point B. What change in the economic environment led to this new equilibrium? IS the consumer better off or worse off as a result of this new price change?

Reference no: EM13213805

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