A. Label graph correctly. A consumer has $360. Good X costs $4 each. Good Y costs $8 each. Draw the budget line. Label i

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A. Label graph correctly. A consumer has $360. Good X costs $4each. Good Y costs $8 each. Draw the budget line. Label it “budgetline A.” Preferences are perfect complements: utility = min{X,Y}.Both X and Y are normal goods. Numerically solve the consumer’sbudget choice. Label it on the diagram, including the indifferencecurve, and all solved numbers. B. A consumer has $400. Good X costs$6 each. Good Y costs $7 each. Draw a new budget line, on a newgraph. Label it “budget line
B.” Once again, preferences are perfect complements: utility =min{X,Y}. Both are normal goods. Numerically solve the consumer’sbudget choice. Label it on the diagram, including the indifferencecurve, and all solved numbers.
C. Herman Cain ran for president in the year 2012. He made thefollowing policy proposal: Reduce the federal income tax, and makeup the federal revenue shortfall with a new national sales taxcharged, in addition to the state and local sales tax. Totalfederal tax revenue would be unchanged. Herman Cain stated that theaverage person would be better off. Use the objective of theconsumer (utility maximization, as illustrated in parts A and B) toexplain and evaluate if Herman Cain was right or wrong.