Question: Explain why utility maximization subject to budget comstraint imploes that the consumer purchases that basket of commodities for which the marginal rate of substitution equals

Explain why utility maximization subject to budget comstraint imploes that the consumer purchases that basket of commodities for which the marginal rate of substitution equals price ratio

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

2.1 . Give short , concise definitions of the following a. price -consumption curve h. budget constraint b. income-consumption curve i. technology c. Engel curve j. short run :1. Giffen good k. long...

Please answer all the required questions in detail I hope the answer is not copy-paste I hope that the answer will be according to the concepts in the chapter 3 The following article summarizes the...

DONT EXPLAIN JUST TYPE LETTER ONLY THANKS Question 1 If a consumer consumes two goods, A and B, and the price of A falls, then the substitution effect would cause the consumer to: a. buy less A and...

solve the following multiple choice and explain please for easy review thank you 30. Core inflation is a measure of 35. A Kisan Credit Card (KCC) Scheme inflation was introduced in the year (A) that...

ECO670...... 1. "Deriving the Envelope Thoerem: Consider the more general problem M(o, ) = max, f(x, a, 8) subject to g(r, a, 8) = 0. Show that: dM(a, B) _ Of(x', a, b) ag(x*, a, b) da da da 2. For...

1Answer the following parts.. Human lCapital Model: Fieinterpretthe human capital growth model as follows: Suppose there are two groups of people in a country, the lowskilled and the highskilled,...

Question 1 0 out of 2.5 points Assume that the price of commodityA is $20, the price of commodity B is $10, and that the consumer is currently spending all available income. At the consumer's current...

Question 37 Not yet answered Marked out of 1.000 \\V Flag question Question 38 Not yet answered Marked out of 1.000 \\7 Flag question Question 39 Not yet answered Marked out of 1.000 \\V Flag...

man2 Exercise #1. Annas preferences over consumption bundles (x1,x2) are summarized by the utility function U (x1,x2) = x1 (x2 + 1)2. (a) Derive an algebraic expression for the marginal utility MU1...

Please provide detailed instructions on how each multiple choice answer was solved. Please see attachment. THEORY OF CONSUMER BEHAVIOR What we'll do: Understand the concept of utility and the...

A retailer is considering building a large store. If the local economy experiences expansion, the firm expects the store to earn a $2,000,000 profit next year. If the local economy experiences a...

XYZ Sdn Bhd is estimating its cash requirement for the third quarter of year 2011. The company's projected sales are as follows: Months March April May June July August September October Sales (RM)...

Which of the following is false regarding the Federal Unemployment Tax Act ( FUTA ) ?

Minnick Co. has net sales of $105,000, cost of goods sold of $70,000, and operating expenses of $20,000. What is its gross profit and its gross profit rate?