Question: Let (x1, x2) be some interior bundle on the budget constraint, and supposep1= 4 andp2= 2. If the marginal rate of substitution at (x1, x2)
Let (x1, x2) be some interior bundle on the budget constraint, and supposep1= 4 andp2= 2. If the marginal rate of substitution at (x1, x2) is -3, then is (x1, x2) optimal? Explain why or why not, and justify your answer with economic intuition.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
