A consumer has an income of $400 and is deciding between two products: X and Y. Assume that the X product is the horizontal axis product. The price of X is $10 and the price of Y is $2. Assume the consumer currently wants to consume 50 units of product Y to maximize his utility. Write out the equation to this consumers budget line. What is the slope to this budget constraint? How much of X and Y will the consumer consume to maximize his utility subject to his budget constraint. Now assume the price of X changes to $5 and price of Y and Income stays the same. At the new price, the consumer wants to buy 60 units of product X to maximize her utility given her budget. How much X and Y will the consumer consume to maximize utility. e inoomsead oubstitution es. Draw the before and after the change of the budget constraint and indifference graph on the same graph space. Show all necessary points. Label clearly.

A consumer has an income of $400 and is deciding between two products: X and Y. Assume that the X product is the horizontal axis product. The price of X is $10 and the price of Y is $2. Assume the consumer currently wants to consume 50 units of product Y to maximize his utility. Write out the equation to this consumers budget line. What is the slope to this budget constraint? How much of X and Y will the consumer consume to maximize his utility subject to his budget constraint. Now assume the price of X changes to $5 and price of Y and Income stays the same. At the new price, the consumer wants to buy 60 units of product X to maximize her utility given her budget. How much X and Y will the consumer consume to maximize utility. e inoomsead oubstitution es. Draw the before and after the change of the budget constraint and indifference graph on the same graph space. Show all necessary points. Label clearly.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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