A consumer has #300 to spend on goods X and Y. The market prices of these two goods are Px = #15 and Py = #5. a. What is the market rate of substitution between goods X and Y? b. Illustrate the consumers opportunity set in a carefully labelled diagram. c. Show how the consumers opportunity set changes if income increases by #300. How does the #300 increase in income alter the market rate of substitution between goods X and Y?

/in /by

A consumer has #300 to spend on goods X and Y. The market prices of
these two goods are Px = #15 and Py = #5.

a. What is the market rate of substitution between goods X and Y?

b. Illustrate the consumers opportunity set in a carefully labelled
diagram. c. Show how the consumers opportunity set changes if income
increases by #300. How does the #300 increase in income alter the
market rate of substitution between goods X and Y?

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