1. A consumer has $300 to spend on goods X and Y. the market prices of these two goods are Px = $15 and Py = $5. a. What is the market rate of substitution between goods X and Y? b. Illustrate the consumer's opportunity set in a carefully labeled diagram. c. Show how the consumer's opportunity set changes if income increases by $300. How does the $300 increase in income alter the market rate of substitution between goods X and Y? 2. 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. b. Show how the consumer's opportunity set changes when the price of good X increases to $20. How does this change alter the market rate of substitution between good X good Y? 3. Consider the following budget line: 100=1+5 a. What is the maximum amount of X that can be consumed? b. What is the maximum amount of Y that can be consumed? c. What is rate at which the market trades goods X and Y? 4. A consumer must spend all of his income on two goods X and Y. In each of the following scenarios, include whether the equilibrium consumption of goods X and Y will increase or decrease. Assume good X is a normal good and good Y is an inferior good. a. Income doubles. b. Income quadruples and prices double. c. Income and all prices quadruples. d. Income is halved and all prices double