3. A consumer’s consumption bundle consists of 2 goods; R and S, with prices PR and PS The consumer’s income is M. Assume that S is graphed on the vertical axis and R is graphed on the horizontal axis. a. Write down the equation of the budget line in explicit form with S as the dependent variable. b. In terms of prices, write down the absolute value of the slope of the budget line? c. What happens to the budget line if the price of R increases, but the price of S remains constant? d. In terms of prices, write down the absolute value of the slope of the budget line if the price of R doubles and the price of S triples. e. In part d, does the budget line become flatter or steeper? Explain.

Afinancial institution, the thriftem bank, is in the process of formulating its loan policy for the next quarter. a total of $12 million is allocated for that purpose. being a full-service facility, the bank is obligated to grant loans to different clientele. the following table provides the types of loans, the interest rate charged by the bank, and the possibility of bad debt as estimated from past experience.type of loaninterest rateprobability of bad debtpersonal.140.10car.130.07home.120.03farm.125.05commercial.100.02 bad debts are assumed unrecoverable and hence produce no interest revenue either. competition with other financial institutions in the area requires that the bank allocate at least 40% of the total funds to farm and commercial loans. to assist the housing industry in the region, home loans must equal at least 50% of the personal, car, and home loans. the bank also has a stated policy specifying that the overall ratio for bad debts on all loans may not exceed .04. formulate this problem as a linear program. define your variables clearly and write all the constraints explaining the significance of each.