a. Write the equation for the budget constraint. b. Draw a graph of the budget set (be sure to label the slope and intercept) c. By looking only at the utility function and prices, what can you say about the optimal consumption of x and y? (include MRS and relationship equation)
a. Write the equation for the budget constraint. b. Draw a graph of the budget set (be sure to label the slope and intercept) c. By looking only at the utility function and prices, what can you say about the optimal consumption of x and y? (include MRS and relationship equation)
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 6QFR
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A consumer has Leontief utility (perfect complements), such that her utility function is U(x,y) = min (2x,y). The price of x (??) is $1 and the price of y (??) is $1. The income (I) is $21.
a. Write the equation for the budget constraint.
b. Draw a graph of the budget set (be sure to label the slope and intercept)
c. By looking only at the utility function and prices, what can you say about the optimal consumption of x and y? (include MRS and relationship equation)
d. What is the optimal amount of x and y that the consumer will buy? e. In the graph above, draw an indifference curve that shows where this consumer maximizes her utility.
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