Justin has the utility function U = xy, with the marginal utilities MUx = y and MUy = x. The price of x is $2, the price of y is p_y, and his income is 40. When he maximizes utility subject to his budget constraint, he purchases 5 units of y.

(a)What must be the price of y and the amount of x consumed? (1 marks).

(b)Prove that this allocation follows the equi-marginal principle (2 marks).

What would be the new bundles of x, y if Px was $3 (2 marks).