Help me to do question c and d Jessica consumes two goods, X and Y. The quantities of X and Y thatJessica may consume are denoted by r and y, respectively. For bundles such that 0.5x < y S 2r,Jessica's marginal rate of substitution is 1; that is, she is willing to exchange any quantity of xby the same quantity of y (as long as 0.5x < y < 2r). However, when y < 0.5x, Jessica onlycares about the quantity of Y, the more of it, the better, but increasing z leaves her in the sameindifference curve: any bundle (x, y) such that y < 0.5x is indifferent to the bundle (2y, y). Finallywhen y > 2r, then she only cares about the quantity of X, the more of it, the better, but increasingy leaves her in the same indifference curve: any bundle (r, y) such that y > 2r is indifferent to thebundle (r, 2r).Suppose that Jessica's income is M = 20 and the prices of X and Y are, respectively, Pz = 4and p, = 2.(a) Write the equation of Jessica's budget line. Setting the quantity of X in the horizontal axis,graph Jessica's budget line.(b) In a new graph, with the quantity of X on the horizontal axis, draw the indifference curvethat contains the bundle (r, y) = (6, 3) and the indifference curve that contains the bundle(r, y) = (2, 6).(c) Find Jessica's optimal bundle. Draw a new graph and represent this bundle, the budgetconstraint, and the indifference curve containing this bundle.(d) Suppose that the price of Y increases to p, = 5. Draw a new figure including everythingyou had in the graph of part (c), and add Jessica's new budget line and her new optimalbundle. Find the income effect and substitution effect for Y.

Name: Help me to do question c and d Jessica consumes two goods, X and Y. Th
Uploaded: 2024-03-20T07:07:37.000Z
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Description: Help me to do question c and d Jessica consumes two goods, X and Y. The quantities of X and Y thatJessica may consume are denoted by r and y, respectively. For bundles such that 0.5x < y S 2r,Jessica's marginal rate of substitution is 1; that is, she