Suppose that goods X and Y are perfect substitutes and the consumer's utility function is given by U(X,Y) = 5X + Y, the prices of goods are px = $2 and py = $1, respectively. The income of consumer is given by I = $100. %3D %3D Find the consumption bundle that maximizes consumer's utility and illustrate it by drawing a graph (with the budget line and indifference curves).

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.