A consumer must divide $600 between the consumption of product X and product Y. The relevant market prices are Px = $10 and Py = $40.
A. Write the equation for the consumer's budget line.
Instruction: If the coefficient on X is a negative number, enter a negative number as your answer.
This is what I got, am I correct?
Y = 375 + -.25X
b. In the graph below, illustrate the consumer's opportunity set.
Instruction: Use the tool provided 'Original Budget Set' to graph the opportunity set from where X = 0 to where Y = 0.
In the same graph, Illustrate the consumer's opportunity set when the price of good X increases to $20.
Instruction: Use the tool provided 'Budget Set with Px = $20' to graph the opportunity set from where X = 0 to where Y = 0.
How does this change alter the market rate of substitution between goods X and Y?
A.It changes from -2 to -4.
B. It changes from -4 to -2.
C. It changes from -0.25 to -0.5.
D. It changes from -0.5 to -0.25.