2. Iyesha likes to consume books (B) and newspapers (N).

a. Iyesha's income is $120, the price of newspapers is PN=2, and the price of books is PB=5. Draw Iyesha's budget line with newspapers on the x-axis and books on the y-axis. Provide the equation describing that line.

b. If Iyesha's utility function is U=N1/10B1/2, what is the marginal utility that she gets from books? What is the marginal utility that she gets from newspapers? What is Iyesha's marginal rate of substitution of newspapers for books?

c. What quantity of books and newspapers does Iyesha consume in order to maximize her utility?

d. Now suppose Iyesha received a promotion at work, raising her income to $240. What quantity of books and newspapers does Iyesha consume in order to maximize her utility?

e. Given your answers to parts (c) and (d), are books normal goods? Are newspapers normal goods? Explain.

f. Suppose that Iyesha's newspaper seller changes his pricing scheme. Instead of selling newspapers for $2, he now charges customers a flat fee of $10 and then sells newspapers for $1 each. Assume Iyesha has an income of $240, as in (d). Is Iyesha better off with the new pricing? Explain.