a) Assume M=8, P1=4, P2=2. Graph the budget set for this consumer.
b) describe the opportunity cost of good 1 in terms of good 2.
c) Find out the opportunity cost of good 1 at the point where x1=1.
d) Does opportunity cost of 1 change as we move along the budget line? describe.
e) Now assume that M=16, P1=2, P2=4. Graph consumer's budget set in this case
f) Can we rank these budget sets in terms of which is better for the consumer? Describe.