Assume that there are two goods.

Assume that there are two goods. The price of the first good is $10 and the price of the second good is $20. The income is m=200.

• Determine the budget constraint.
• Determine the slope and the intercepts of the budget line.
• Graph the budget set.
• Assume that income increases to m=300. At the same time, the price of good 1 increases to 20. Determine the equation of the new budget line.
• Determine the slope and the intercepts of the new budget line.
• Graph the new budget set.