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Can you do an explanation for this graph please soon as possible.

Can you do an explanation for this graph please soon as possible.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Can you do an explanation for this graph please soon as possible.
1. Assume that there are two individuals, A and B. Using the framework discussed in class, graph a scenario where A maximizes her utility by "donating" $10,000 of her income to person B. Be sure to label your graph accordingly, including the slope of A's budget line. Assume that persons A and B both start out with $50,000 in income.
Transcribed Image Text:1. Assume that there are two individuals, A and B. Using the framework discussed in class, graph a scenario where A maximizes her utility by "donating" $10,000 of her income to person B. Be sure to label your graph accordingly, including the slope of A's budget line. Assume that persons A and B both start out with $50,000 in income.
FIGURE 7.2 The Optimal Income Transfer from an Altruistic Person At point C, Franny's MRS between her income and Zooey's is exactly equal to the absolute value of the slope of her budget constraint. Given her preferences, the best she can do is give $19,000 of her original $50,000 income to Zooey, keeping $31,000 for herself. RING 01 10 de 50,000 was Franny's income THURTH MIA-THE 199 ERRO di beac 31,000 pedim dno Ad sval 10,000 C 29,000 TER D 12913 od yd bomma Menonibba gaib 280/2 1₁ B 60,000 Zooey's income 1911 ha
Transcribed Image Text:FIGURE 7.2 The Optimal Income Transfer from an Altruistic Person At point C, Franny's MRS between her income and Zooey's is exactly equal to the absolute value of the slope of her budget constraint. Given her preferences, the best she can do is give $19,000 of her original $50,000 income to Zooey, keeping $31,000 for herself. RING 01 10 de 50,000 was Franny's income THURTH MIA-THE 199 ERRO di beac 31,000 pedim dno Ad sval 10,000 C 29,000 TER D 12913 od yd bomma Menonibba gaib 280/2 1₁ B 60,000 Zooey's income 1911 ha
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