100% Normal text Times New... 12 1+ BIUA 6 3.Jill spends her entire income on two commodities, X and Y. In three subsequent periods, the prices and quantities purchased (and consumed) by her were: Px($) PX($) X Y Period 1 30 10 Period 2 att 140 10 Period 3 80 10 a. Draw the three budget lines in the same diagram, and locate the three bundles chosen by the consumer (P1, P2, and P3) b. Does the curve through Pl and P3, which represents changes in income, only pass below, above, or through P2 Explain c. Comment on the price elasticity of demand for X and Y in the relevant price ranges? 7. In a study of the New York Transit Authority, steven discovers the subway ridership elasticity with respect to subway fares is 0.15 while the cross elasticity of demand for subways with respect to bus fares is 0.6. A. On basis of the information given above, would a reduction in fares increases or decrease the Transit Authority's revenues? B. Are buses and subways substitutes or complements in New York? Briefly explain. C. If subway fares are expected to rise by one-third, how will bus fares have to change to offset the effects of this increase in subway fares on subway rides demanded? 10. Evaluate and show graphically your responses for the following statements when the price of X increases, then A. If X is Giffen, then it must be inferior, but if a good is inferior it doesnt have to be Giffen. B. If X is inferior, the demand for X cannot be elastic. Provide a graphical proof for your explanation. | O