Recall that the household's budget constraint for two goods is

=11+22

whereMis the household's income/money,Pare the prices, andXare the goods.

Recall that the slope of the budget line is

=12

Suppose that initially:

=$100

1=$20

2=$10

1. Fill in the blank. Given the choices (5, 10, 20, 100), what is the maximum amount of good one that the household can purchase?

2. Fill in the blank. Given the choices (5, 10, 20, 100), what is the maximum amount of good two that the household can purchase?

3. Fill in the blank. Given the choices (-2, -0.5, -1, undefined), what is the slope of the budget line?

Fill in the blank using the key words to complete the following sentence. If the initial price of good two changes to $20, then the budget line will _____________________.

Key words:not change,rotate inward, rotate outward, shift parallel inward, shift parallel outward

6. Fill in the blank using the key words to complete the following sentence. Doubling the household's initial income, while initial prices remain unchanged, means the budget line will _________________.

Key words:not change, rotate inward, rotate outward, shift parallel inward, shift parallel outward

7. Fill in the blank using the key words to complete the following sentence. Doubling the household's initial income, in addition to doubling both initial prices, means the budget line will __________________.

Key words:not change, rotate inward, rotate outward, shift parallel inward, shift parallel outward