A consumer has $400 to spend on goods X and Y. The market prices of these two goods are Px=$10 and Py=$40.
a.What is the market rate of substitution between goods X and Y?
b.Illustrate the consumers opportunity set in a carefully labeled diagram.
c.Show how the consumers 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?