A charity organization has a budget of$200 (you can multiply everything by 1000 to make the numbers more credible, but let's reduce the number of zeros) to allocate between two goods: food to be distributed (Good 1) and blankets (Good 2). The price of blankets is$1.

1. Suppose the price of food is$2. Draw the charity's budget line, indicating its intercepts with the axes and its slope .
2. Now, the charity receives a donation of$40 in cash. Draw the charity's new budget line under this donation.
3. Suppose that instead of receiving a donation of$40 in cash, the charity receives 20 units of food which are worth$40. Assuming that the charity cannot sell their food in the market for money, draw its new budget line under this donation.
4. Now, suppose that in addition to the in-kind donation of food in item [C.], the charity receives also a donation of$40 in blankets. Assuming that the charity organization cannot sell their blankets in the market for money, draw its new budget line under this additional donation .
5. Suppose an analyst tells you that the charity's optimal bundle when it faces the budget line in [B.] is to consume 60 units of food and 120 blankets. Would the charity be worse off, better off or indifferent if instead of receiving the cash donation in [B] it received the in-kind donation of food in [C.]? Justify your answer.
6. Let's get back to the case without any donation. A non-perishable food outlet strikes a deal with the charity: For the first 40 units of food, the charity pays$2 for each unit; for the next 40 units of food, the charity pays$1.5 for each unit; beyond the 80th unit, the charity only has to pay$1 per unit of food. Draw the charity's new budget line