Problem Set #1ECN 130Summer 2014Prof. EschkerQuestions 5-10 are practice problem

Problem Set #1ECN 130Summer 2014Prof. EschkerQuestions 5-10 are practice problems and are not graded. Do not hand them in. Try to complete thembefore I post the answer key.1. You have $600 to spend on beans and rice. The price of beans is $40 and the price of rice is $30.a. Graph your budget constraint with books on the vertical axisb) Suppose that the government subsidizes beans such that each unit of beans are half-price up to thefirst 2 units (any additional units are full price). Graph your budget constraint in this circumstance.2. Consider a free market with demand equal to Q = 100