2. A.) Suppose budget line is L1, what combination of X and Y will theconsumer choose? Choose corresponding letter.Why will theconsumer not choose point A or C?B. ) b. Which budget line would be relevant to utility maximizationanalysis if money income remains at the original level as L1,the price of X remains the same, and the price of Y increases.Which combination of X and Y will the consumer choose?Choose corresponding letter.C.) Which budget line would be relevant to utility maximizationanalysis if money income rises from original level L1 while theprices of X and Y remain the same.Which combination of X and Y will the consumer choose?Choose corresponding letter.D. ) How will optimum combinations change as budget moves fromL1 to L2? L1 to L3? Which combination contains more units ofeach good?

2. Answer the following question, given a budget line and an indifference map below. Quantity of Y Quantity of X