Explain using a graph (Indifference Curve and Budget Constraint with everything labeled correctly) what the incentive...

 

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Explain using a graph (Indifference Curve and Budget Constraint with everything labeled correctly) what the incentive the individual consumer faces when determining the optimal consumption bundle. Introduce multiple consumption bundles; one at the optimum, and one that isn't at the optimum, and show what the individual will do and why. Assume that U(X,Y)= AX + BY Explain your graph in words and mathematics, using the key mathematical relationships we've identified to represent the incentives faced by the firm. Explain using a graph (Indifference Curve and Budget Constraint with everything labeled correctly) what the incentive the individual consumer faces when determining the optimal consumption bundle. Introduce multiple consumption bundles; one at the optimum, and one that isn't at the optimum, and show what the individual will do and why. Assume that U(X,Y)= AX + BY Explain your graph in words and mathematics, using the key mathematical relationships we've identified to represent the incentives faced by the firm.

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To illustrate the consumers decisionmaking process we can use a graph that incorporates an indifference curve and a budget constraint Lets assume the consumer has two goods X and Y and their utility f... View the full answer