Suppose that a consumer’s marginal rate of substitution at her current chosen bundle is MUx / MUY = 4, but she is able to exchange X and Y at Px/PY = 3. Should she keep her current bundle, or can she make herself better off by trading at these prices? Which good will she buy, and which will she sell?

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A: Since you have posted multiple questions, we will solve the first one for you. If you want any…

Q: Suppose that a consumer's marginal rate of substitution at her current chosen bundle is MUx/MUy=3…

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A: i. u(x,y)=x+y          x+4y=100 α=max u(x,y) st x+4y=100α=x+y+λ(100-x-4y)dαdx=12x-λ=012x=λ…

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A: Since you have asked multiple questions, we will solve the first question for you. If you want any…