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2. Suppose we have a 2- good economy; clothing and food. Food is graphed on the Y axis and clothing is graphed on the X
2. Suppose we have a 2- good economy; clothing and food. Food is graphed on the Y axis and clothing is graphed on the X axis.
a.If prices and income double, what will happen to the budget line?
b. Express the slope of the budget line in terms of the prices of the 2 goods (PCand PF)
c. What happens to the budget line if a tax of 10% is placed on the purchase of clothing?
d. What is the slope of the budget line after the introduction of the tax?
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