A person has $6000 to spend on two goods (x and y) whose respective prices are $3 and $5 per unit.

(a) Draw the budget line showing all the different combinations of the two goods that can be bought with the given budget.

(b) What happens to the budget line if the budget (money available to spend) falls by 25%.

(c) What happens to the budget line if the price of good x

doubles?

(d) What happens to the budget line if the price of good y

falls to $4 per unit?

(e) Consider a scheme of quantity discount where is you buy more than 20 units of good x for each additional unit the price of good x is lower by 50 % .

Draw the new budget line.

Note: In parts (b)-(e), there is no change in the remaining parameters of the question (i.e., the price of other good or the income as the case may be).