Answer the following questions

1.Draw a budget line for linvell, who has a monthly income of Php10,000.00. Assume that she buys steak and fries, and the burger steak costs Php1,000.00 per kilo and potatoes cost Php200.00 per kilo. Add an indifference curve for linvell that is tangent to her budget line at the combination of 5 kilos of steak and 25 kilos of potatoes.

NOTE: Plot your steak along the X-axis.

2.On the same graph you have earlier constructed, draw a new budget line for linvell, if her monthly income falls to Php8,000.00. Assume that potatoes are inferior good to linvell . Draw a new indifference curve tangent to her new budget line that reflects this inferiority. What will happen to linvell potato consumption? What will happen to her burger steak consumption?

3.Clara spends all her income on magazines and novels. Illustrate each of the following situations on a graph, with the quantity of magazines on the vertical axis and the quantity of novels on the horizontal axis. Use 2 budget lines and 2 indifference curves on each graph.

3.1 When the price of magazine rises, Clara buys fewer magazines and more novels.

3.2 When Clara's income rises, she buys more magazines and more novels.

3.3 When Clara's income rises, she buys more magazines and fewer novels.