Bob views apples (a) and oranges (o) as perfect substitutes in his consumption. When we put apples on the horizontal axis and oranges on the vertical axis, MRSao = 0.5 for all combinations of the two goods in his indifference map. Suppose the price of apples is $2 per pound, the price of oranges is $3 per pound, and Bob's budget is $30 per week. Given Bob’s budget constraint, what is his utility maximizing choice?
Bob views apples (a) and oranges (o) as perfect substitutes in his consumption. When we put apples on the horizontal axis and oranges on the vertical axis, MRSao = 0.5 for all combinations of the two goods in his indifference map. Suppose the price of apples is $2 per pound, the price of oranges is $3 per pound, and Bob's budget is $30 per week. Given Bob’s budget constraint, what is his utility maximizing choice?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section6.A: Indifference Curve Analysis
Problem 1SQP
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Bob views apples (a) and oranges (o) as perfect substitutes in his consumption. When we put apples on the horizontal axis and oranges on the vertical axis, MRSao = 0.5 for all combinations of the two goods in his indifference map. Suppose the price of apples is $2 per pound, the price of oranges is $3 per pound, and Bob's budget is $30 per week. Given Bob’s budget constraint, what is his utility maximizing choice?
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