Continuing from the previous question. GoodP 12000 Good G The Budget Line/Indifference Curve graph can show what combination of 2 goods a person will choose based on his income, the price of the two goods, and his tastes and preferences. A person's tastes and preferences are represented by indifference curves. The person will not choose point B because at point B the opportunity cost of G is v This means the person can move to a higher indifference curve and be happier if they sell units of good P at the ma At point B, the MRSC is greater than than the Opportunity Cost of G. This means that at point B, if the person gave up one unit of G, sold it, and took the money and bought Good P he would make himself sadde v . This happens because the value of good P in consumption is less than the value of the good in exchange.

Continuing from the previous question. GoodP 12000 Good G The Budget Line/Indifference Curve graph can show what combination of 2 goods a person will choose based on his income, the price of the two goods, and his tastes and preferences. A person's tastes and preferences are represented by indifference curves. The person will not choose point B because at point B the opportunity cost of G is v This means the person can move to a higher indifference curve and be happier if they sell units of good P at the ma At point B, the MRSC is greater than than the Opportunity Cost of G. This means that at point B, if the person gave up one unit of G, sold it, and took the money and bought Good P he would make himself sadde v . This happens because the value of good P in consumption is less than the value of the good in exchange.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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