Aeb4334

AEB4334Assignment 1Joe Taylor 1) . Use the belief outing graph video pageantry a liquidaters work out line and some tranquillity contracts to event the following questions (a through f). The consumers income is $600. a) What is the harm of commodity X? What is the price of ripe(p) Y? We know the income of consumer is $600, so if we look at the intercept of the demand function, we see that the consumer could purchase 30 units of Y and spend all of the income. This being the case$600/30 indicates that the terms of corking Y is $20 and the cost of equitable X, $600/40, is lucifer to $15. b) Given the consumers income of $600, what is the highest level of salutary the consumer pot hit? formulate. The highest level of utility can be achieved at the token where the consumer demand line is tangent to IC distort ii. It is the specify that represents the highest combination of goods that lies on the highest indifference curve indoors the r eckon line of the consumer. c) If the consumer is making an optimal choice, how many units of Good X should he or she consume and how many units of Good Y should he or she consume? Why? condone your answer. The consumer should tack to stringher a combination of goods that gives the consumer the same marginal utility per one dollar bill spent for both(prenominal) good X and Y.

This is the point where the bud corroborate line is tangent to IC curve ii. At this point, the consumer should consume 20 units of good X and 15 units of good Y. d) At the optimal consumption galvanizing pile, what is the Marginal Rate of surrogate? Explain how! you found this answer. advise the meaning of the Marginal Rate of Substitution at this bundle. At the optimal consumption bundle, the marginal roll of substitution is 30/40=3/4=.75 On IC curve ii, where the budget line is tangent to it, you follow the line to both axis. You can interpret the MRS as the consumer spontaneous to give up 3 units of good Y to get 4 units of good X. e) Suppose that the consumer is currently at bundle A....If you want to get a full essay, order it on our website: BestEssayCheap.com

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