1.Suppose an individual has an income of $15 per time period, the price of good X is $1 and the price of good Y is also $1. That is, I = $15, P_X = $1, and P_Y = $1.

a)Write the equation of the budget line of this individual in the form that indicates that the amount spent on good X plus the amount spent on good Y equals the individual's income.

b)Write the equation of the budget line in the form that you can read off directly the vertical intercept and the slope of the line.

2.Suppose an individual has an income of $15 per time period, the price of good X is $1 and the price of good Y is also $1. That is, I = $15, P_X = $1, and P_Y = $1.

a)Write the equation of the budget line of this individual in the form that indicates that the amount spent on good X plus the amount spent on good Y equals the individual's income.

1.Following table gives two supply schedules of a producer of commodity X. The first of these two supply schedules is Qs_x the second is Q₁s_{x1 ;} resulted from an increase in the prices of the inputs necessary to produce commodity X (everything else remained constant).

P_x($)

6

5

4

3

2

1

Qs_x

42

40

36

30

20

0

Q₁s_x1

22

20

16

10

0

0

(a) What would happen if the price of X rose from $3 to $5 before the shift in supply? (b) What quantity of commodity X will the producer place on the market at the price of $3 before and after the supply curve shifted up? (c) What happens if at the same time the producer's supply of X decreases, the price of X rises from $3 to $5?