1. Health care cost is expected to increase in Malaysia. Let X

represent

(f\JJ the quantity of medical cost, Y represent the quantity of other

goods and income (M) be measured in hundreds of Ringgit Malaysia. The

price of medical services and other goods in terms of dollars per

minute, with

M = 600, Px = 8, and Py = 10.

(a) Illustrate the budget set, and determine the market rate of

substitution.

(b) Show in your graph what happens to the budget constraint if Px

decreases to RS.6.

(c) What is the meaning of the slope of the two budget constraints?