Re: Demand question
Posted by onionknight on May 21, 2015; 2:38pm
URL: http://discussion-forum.276.s1.nabble.com/Demand-question-tp7597108p7597109.html
Indifference curves for the given utility function look like this:
The given consumption bundle gives the consumer a utility of 32 and lies on the part of the indifference curve with slope 2. If the consumer maximizes utility, he would choose a consumption bundle on the line with slope 2 only if the price ratio is also 2. Py=0.5 and price ratio=2 implies Px=1. Income = 1*8+0.5*16=16
URL: http://discussion-forum.276.s1.nabble.com/Demand-question-tp7597108p7597109.html
Indifference curves for the given utility function look like this:
The given consumption bundle gives the consumer a utility of 32 and lies on the part of the indifference curve with slope 2. If the consumer maximizes utility, he would choose a consumption bundle on the line with slope 2 only if the price ratio is also 2. Py=0.5 and price ratio=2 implies Px=1. Income = 1*8+0.5*16=16
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