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A2: Assume there are two goods, strawberries and carrots

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A2: Assume there are two goods, strawberries and carrots. Assume the price of carrots increases two times. In other words, the price increases from Pcarr? to Pcarr?, and then from Pcarrto Pcarr3. Income and the price of strawberries remain constant. Since there are no numbers associated with this problem, the direction of the shifts and relative placement of the points matter, not their exact locations. Draw and label the initial budget constraint, optimal indifference curve and optimal bundle. On your graph, draw strawberries on the vertical axis. Label Z*, as the optimal bundle and XCarr? in the optimal bundle. Draw and label the updated budget constraints when the price is Pcarr2 and when the price is P carr3. Also, draw the optimal indifference curves and optimal bundles. Label the optimal bundles Z* , and Z*3. Also, label Xcarr2 and XCarr3 associated with the respective optimal bundles. Draw and label the price consumption curve. Beneath the initial graph, draw and label the demand curve for carrots. Label Pcarrº, P carr?, and Pcarrº. Also, label XCarr", XCarr?, and XCarr3. 2 3 .