Consider John who consumes two goods, (X and Y), with prices ?? = ?$35, ?? = ?$25 and income I =N$1500 i) Construct budget constraint and draw John’s budget line with good X on the horizontal axis. (ii) Use a graph to show the effect of an increase in income from N$1500 to N$2000.  What will happen to the slope of the budget line if the price of good X decreases to N$18?

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Equilibrium Price and Quantity

Equilibrium refers to a state of balance that comes about because there is equality in all forces.