Question: how would i do this problem in excel and set up a chart Example 4.13 Figure E4.13 shows a budget line drawn along an indifference
Example 4.13 Figure E4.13 shows a budget line drawn along an indifference curve for a con- sumer who is primarily interested in two goods, X and Y. If the price of Good X is $50/unit: (a) What is the consumer's income? (b) What is the price of Good Y? (c) What is the equation of the budget line? (d) Find the MRS at equilibrium. Good Y 80 40 B 100 Figure E4.13 Budget and indifference curve 50 P (d) At equilibrium, MRS ===- V=200 Solution (a) The consumer's income (or budget) for these two goods must be 100 x 50 = $5,000 because she can afford to buy 100 units @ $50/unit of Good X if she does not choose to buy any units of Good Y. (b) The price of Good Y per unit must be 5000/80 = $62.50 (c) The equation for the budget line: PX+ P,Y= I, where I = Income for the two goods 50X + 62.5Y = 5,000 50 P 62.5 Good X = 0.8
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