"a) Equation of budgetline 5X + 10Z = 500 a) b) Good Z B 50 units M = $500 0 C 100 units Good X M = $500 Px = 5 Therefore quantity of X = 500/5 = 100 units, thus 0c = 100 units Pz = 10 Therefore quantity of Z = 500/10 = 50 units, this 0B = 50 units. c) Slope of budget line Slope of the price line is the ratio of prices of two commodities. b) B Good Z C Good X Suppose price of X is Px per unit and price of Z is Py per unit. Thus the consumer can buy OCof X by spending all money on X, or OB of Y by spending all money on Z.Thus Px* OC= Pz*OBSlope of price line is tan of angle BCO = OB/OC = Px/Pz ($5/$10) or, 0.5 D) New budget line when M=$300 OC = 300/5 = 60units OB = 300/10=30units Good Z M = $300 30 units B 0 C 60 units Good XSuppose price of X is Px per unit and price of Z is Py per unit. Thus the consumer can buy OCof X by spending all money on X, or OB of Y by spending all money on Z. "