Think about a consumer with a utility function given by u=ax+bx2, he is facing a budget...

Transcribed Image Text:

Think about a consumer with a utility function given by u=ax₁+bx2, he is facing a budget constraint: p1x1+p2x2<= 1. A). What is the slope of the indifference curve (-MRS1,2)? B). What is the slope of the budget line? C). If a=1, b=2, p1=3, p2-4, what is the optimal consumption? D). If a=1, b=2, p1=2, p2-4, what is the optimal consumption? Think about a consumer with a utility function given by u=ax₁+bx2, he is facing a budget constraint: p1x1+p2x2<= 1. A). What is the slope of the indifference curve (-MRS1,2)? B). What is the slope of the budget line? C). If a=1, b=2, p1=3, p2-4, what is the optimal consumption? D). If a=1, b=2, p1=2, p2-4, what is the optimal consumption?

Answer rating: 100% (QA)

Here we are discussing about perfect substitution Consumer with a utility func... View the full answer