Q16. The diagram below shows three indifference curves for a consumer, along with their weekly budget line:

Units of Good X

a) If the price of good Y is 3 per unit, what is the consumer's weekly budget? (7marks)

b) What is the price per unit of good X? (7 marks)

c) Write down the equation for the consumer's weekly budget line. What is the slope of the budget line? (7marks)

d) What impact will an increase in the price of good Y to 5 per unit have on the consumer's weekly budget line (the weekly budget and price per unit of good X remains unchanged)? Draw a rough sketch to illustrate your answer (7 marks)

e) Explain which indifference curve the consumer prefers. Which indifference curve allows the consumer to choose an optimal bundle of goods Y and X, given their weekly budget? (7marks)