Sally's preferences can be represented by U = x 2 y and the associated indifference curves are given in the following diagram.

1. Sally's preferences can be represented by U = 5023/ and the associated indifference curves are given in the following diagram. Sally has an income of $9 to spend on magazines (x) and books (y). The price of books is $1 and the price of magazines is $1. Her budget is labeled BC2.How many books and magazines does sally consume? (round to the nearest integer) If the price of magazines increases to 2, her budget becomes BC in the diagram. How many books and magazines does Sally consume? Do your best to draw the appropriate budget constraint and, based on the budget constraint, calculate the maximum amount of money that Sally would be willing to pay to avoid the price change (the equivalent variation of the price change do not round your answer to the nearest integer). If the price change were the result of a $1 tax on magazines, how much revenue would be generated by the tax? If the government could tax Sally's income, what is the largest amount of money they could collect from Sally while leaving her as happy as the magazine tax? Draw the budget constraint associated with the compensating variation of this price change. Using her choice from this compensated budget, what is the Sub stitution Effect and what is the Income Effect of the price change? (give your answer as a number and represent it in the graph)