021(3)... Question 5 (20 marks). Jessica consumes two goods, X and Y. The quantities of X and Y that ACCT1101 Jessica may consume are denoted by ax and y, respectively. For bundles such that 0.5x 2x, then she only cares about the quantity of X, the more of it, the better, but increasing y leaves her in the same indifference curve: any bundle (x, y) such that y > 2x is indifferent to the BUS3310 ECON1011 bundle (x, 2x). Suppose that Jessica's income is M = 20 and the prices of X and Y are, respectively, Pa = 4 and Py = 2. CHIN2700 FINM1416 (a) Write the equation of Jessica's budget line. Setting the quantity of X in the horizontal axis, graph Jessica's budget line. (5 marks) BUS2302 LAWS1100 (b) In a new graph, with the quantity of X on the horizontal axis, draw the indifference curve that contains the bundle (x, y) = (6, 3) and the indifference curve that contains the bundle CON1301 . MGTS1601 (x, y) = (2, 6). (5 marks) (c) Find Jessica's optimal bundle. Draw a new graph and represent this bundle, the budget constraint, and the indifference curve containing this bundle. (5 marks) NVM2100 . MGTS1301 (d) Suppose that the price of Y increases to Py = 5. Draw a new figure including everything you had in the graph of part (c), and add Jessica's new budget line and her new optimal BUS2301 MGTS3301 bundle. Find the income effect and substitution effect for Y