Question 2: Budget constraint and Indifference curve Question Assume the prices of product X and Y are $2.00 and $1.00, respectively, and that Mr. Mo has $100 to spend. Assume a normal indifference curve. a. What is the slope of Mr. Mo budget constraint. b. Write out Mr.Mo equation to his budget constraint. c. Assume that Mr. Mo needs 10 units of product X to maximize utility. What combination of X and Y will Mr. Chen purchase? d. Now assume that the price of Y changed from $1.00 to $2.00, redo part a, b and c, e. Draw the budget constraint graph and indifference curve before the change and after the change in the price of Y.

Question 2: Budget constraint and Indifference curve Question Assume the prices of product X and Y are $2.00 and $1.00, respectively, and that Mr. Mo has $100 to spend. Assume a normal indifference curve. a. What is the slope of Mr. Mo budget constraint. b. Write out Mr.Mo equation to his budget constraint. c. Assume that Mr. Mo needs 10 units of product X to maximize utility. What combination of X and Y will Mr. Chen purchase? d. Now assume that the price of Y changed from $1.00 to $2.00, redo part a, b and c, e. Draw the budget constraint graph and indifference curve before the change and after the change in the price of Y.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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