Question 2 Takisha (preferred pronoun: she/her) consumes only two goods: apples (good I) and books (good y). Throughout this question the price of book remains $1. Suppose you know that, if she consumes 5 books, she can buy at most 10 apples. And if she consumes 8 books, she can buy at most 4 apples. (a) (Level A) Determine her income (M) and the price of apple (1)}. Write out the equation of her budget line. Draw her budget line in a well-labelled diagram. (b) (Level A) Suppose the government taxes her in the following way: for each apple consumed, Takisha has to pay a tax of t = {1.5. 1Write out the equation for her new budget line and draw it on your diagram for part (a). (c) (Level B) After evaluating the policy, the government decides the tax is too harsh. It now declares that the tax will now kick in only after 5 applll. (That is, if 1: 1-: 5 she doesnt pay the tax; but if I L\":- 5 the tax applies to each apple that exceeds the 5th one.) Write the equation of each part of the budget line and draw the budget line on a new graph. (Hint: There will be a kink on the budget line. Indicate the bundle at which the kink occurs.) (d) (Level B) This government is extremely indecisive. In another change of policy, it decides that the tax break makes sense for the poor, but there is no reason to offer it to the rich. The new policy is as follow: if a persons income is less or equal to $10, the person gets the tax break (as in part c); if the persons income greater than $10, this person must pay taxes on the entire purchase of apples (as in part b). Now suppose Takisha's employer offers her a raise of $2, can we be certain that Takisha will accept the raise? 1'What about a raise of $4? Analyse this by drawing the two budget lines after the respective raise in the diagram you draw for part (c)