Assume that Bob's income is $21 and he can spend his money on either apples or bananas. The price of apples (PA) is $2/pound and the price of bananas (PB) is $3/pound. Assume that bananas are the y-axis good. The equation for the budget line is and the slope of the budget line is Assuming Bob has the standard convex indifference curves, this means his MRSAB when he is maximizing utility is ده B=7-A, -, -2 B = 7 - A-- OB = 10.5-A.-23.-22 N/w 2 B = 10.5 - 2A, -3, -3
Assume that Bob's income is $21 and he can spend his money on either apples or bananas. The price of apples (PA) is $2/pound and the price of bananas (PB) is $3/pound. Assume that bananas are the y-axis good. The equation for the budget line is and the slope of the budget line is Assuming Bob has the standard convex indifference curves, this means his MRSAB when he is maximizing utility is ده B=7-A, -, -2 B = 7 - A-- OB = 10.5-A.-23.-22 N/w 2 B = 10.5 - 2A, -3, -3
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 5SQP
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Transcribed Image Text:Assume that Bob's income is $21 and he can spend his money on either apples or
bananas. The price of apples (PA) is $2/pound and the price of bananas (PB) is
$3/pound. Assume that bananas are the y-axis good. The equation for the budget
line is
and the slope of the budget line is
Assuming Bob
has the standard convex indifference curves, this means his MRSAB when he is
maximizing utility is
OB=7-A,
-
-A, -3, -2
ته
OB=7-A-3-7/
=
32
OB 10.5-A.-.-.
OB 10.5A, –
-
N/W
|
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