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Pam has a monthly budget of 120 to be spent on Tshirts and trainers. She could afford to buy two Tshirts and two pairs of

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Pam has a monthly budget of 120 to be spent on Tshirts and trainers. She could afford to buy two Tshirts and two pairs of trainers. She could also buy eight Tshirts. In each case, she would be spending her entire monthly allowance. a) Calculate the price of a Tshirt and the price of a pair of trainers. Write down Pam's budget equation and draw the corresponding budget line. Mark the two consumption bundles mentioned above. In your graph, clearly label the axes, the budget line, and calculate the coordinates of the points of intersection of the budget line with each axis. Interpret each of those points. b) Discuss how Pam's budget set would change if the price of a T-shirt doubles. Show the relevant changes graphically. How should Pam's income change so that she could still afford to buy two Tshirts and two pairs of trainers? C) Discuss how Pam's budget constraint would change if the government imposed a tax of 3 per each pair of trainers

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