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.