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Budget constraint - Need help 1. Budget constraint (part 1) Let x1 2 0 and 12 2 0 be the levels of consumption of good

Budget constraint - Need help

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1. Budget constraint (part 1) Let x1 2 0 and 12 2 0 be the levels of consumption of good 1 and good 2, respectively. Income is I = 8 and the prices of good 1 and good 2 are p1 = 1 and p2 = 1, respectively. The government decides to subsidize the consumption of good 1 in the following way. For each of the first 6 units of good 1 (i.e., x1 p1, this is not a typo. Then, there is no more subsidy for any additional unit beyond 6 units (i.e., x1 > 6). Draw the budget line and clearly label your graph. 2 20 19 18 17 16 15 14 -NWAOO NOOOO-NOW 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

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