Suppose a consumer has a daily income of $48 and purchases just two goods, A and B. The price of A is $8 and the price of B is $6.
a. Draw the budget line for the consumer in a graph. Indicate the area of the graph that is attainable given the income and the area that is unattainable.
b. Suppose the price of good A drops to $6: how does the budget line change? Illustrate this graphically.
c. Suppose further that the consumerâs income increases to $60. Show how the budget constraint changes graphically.