Question: The only two goods that give Bart utility are soap and calculators. When calculators cost $8 each and soap costs $2 per bar, his optimal

The only two goods that give Bart utility are soap and calculators. When calculators cost $8 each and soap costs $2 per bar, his optimal consumption bundle is 8 bars of soap and 4 calculators. What is his income? Now the price of soap rises to $3 and the price of calculators falls to $6, so he can afford a combination of 10 soaps and 3 calculators if he so desires. Would it make any sense for him to consume this new combination? (: Draw a graph)

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Budget line M P1X1 P2X2 a Income 8 x 4 2 x 8 32 16 48 b As price of soap rises price of calcu... View full answer

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