Suppose that the price of commodity Y is $2 per unit while the price of  commodity X is $4 per unit and suppose that an individual’s money income is $100 per time period and is all spent on X and Y. Draw the budget constraint line for this consumer at the initial point.       2.If the price of Y decreases to $3, incorporate BL2 showing change in the Budget line.

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Revealed Preferences and Budget Constraint Analysis

Revealed means “Let Out,” and Preference means “Choice”; Choice Reveals Preference.