Suppose you consume nothing but goods X and Y. We have two years?of data regarding your consumption and income:
I = $10 per week; PX = $1 per unit; PY = $1 per unit.
Your consumption: X = 6 units; Y = 4 units.
I = $20 per week; PX = $2.50 per unit; PY = $1.25 per unit.
(a) In which year are you happier? Show your result on a graph using indifference curves.
(b) In which year do you consume more Y? This should be obvious from your graph in (a), assuming your graph is correct.