Based on the below graph showing a consumer's budget line and some indifference curves, answer...
Question:
Based on the below graph showing a consumer's budget line and some indifference curves, answer the following questions. The consumer's income is {eq}\$ 600 {/eq}.
a) If the consumer is buying the combination at point B, the MRS is {eq}\cdots \cdots \cdots {/eq} than the price {eq}\cdots \cdots \cdots {/eq}. So the consumer should buy more {eq}\cdots \cdots \cdots {/eq} and less {eq}\cdots \cdots \cdots {/eq} to increase utility.
b) At point B, the MUX/PX is {eq}\cdots \cdots \cdots {/eq} than the MUY/PY.
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MRS:
MRS is the marginal rate of substitution, It is the slope of the indifference curve which shows the rate at which one good is sacrificed to gain another good.
Answer and Explanation: 1
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View this answera) If the consumer is buying the combination at point B, the MRS is less than the price ratio . So the consumer should buy more Y and less X to...
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Utility Maximization: Budget Constraints & Consumer Choice
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Chapter 3 / Lesson 2
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Learn about utility maximization. Discover various types of utility, examine utility maximizing rules, and study examples of maximizing utilities in economics.
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