E1)Rumi has $100 and is deciding how to spend it on bread and wine. The price of bread is $2 and the price of wine is $2. (Both goods are infinitely divisible.)

Write down the budget constraint in terms ofax1+bx2=c, wherex1is quantity of bread andx2 is quantity of wine. (Since this is a linear equation, you could scalea,b, andcby an arbitrary scalar. In this and subsequent questions, just letcbe the total budget in dollars.)

a=?

b=?

c=?

E2)Suppose the price of wine drops from $2 to $1 when a new source of grapes is found in Tashkent. Write down the new budget constraint.

a=?

b=?

c=?

E3)Use the original prices ($2 for both bread and wine), but suppose that Rumi's income increases from $100 to $200 when he earns the patronage of the shah. Write down the new budget constraint.

a=?

b=?

c=?