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Suppose the price of X is $5 and the price of Y is $10 and a hypothetical household has $500 to spend per month on goods X and Y a

Economics

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Suppose the price of X is $5 and the price of Y is $10 and a hypothetical household has $500 to spend per month on goods X and Y

a. Sketch the household budget constraint.

b. Assume that the household splits its income equally between X and Y. Show where the household ends up on the budget constraint.

c. Suppose that the household income doubles to Rs. 1000. Sketch the new budget constraint facing the household.

d. Suppose after the change the household spends Rs 200 on Y and Rs 800 on X. Does this imply that X is a normal or an inferior good? What about Y?