Q1. A consumer has $400 to spend on goods X and Y. The market prices of these two goods are Px = $10 and Py = $40. What is the market rate of substitution between goods X and Y?
Illustrate the consumer's opportunity set in a carefully labeled diagram.
Show how the consumer's opportunity set changes if income increases by $400. How does the $400 increase in income alter the market rate of substitution between goods X and Y?
Q2. What factors influence Under Amour's ability to make an economic profit in the cross-training shoe market?