Suppose an individual has income y0 of the numeraire good y. Consider 3 prices of good x: At

the highest price, px3= y0 /x0, the individual's optimal consumption of x is x. At an intermediate

price px2= y0/x1 where x1 = 2x0, the optimal consumption of x would be x. And at the lowest

price of x, px1= y0 /x2 where x2 = 3x0, the optimal consumption of x is x.

a) Depict this situation graphically.

b) In a diagram directly below the diagram in part a), derive 3 points on this individual's demand

curve, indicating the quantities x, x and x that correspond to the prices px3 , px2 , and px1

respectively