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Essay heading: Economics Junk
Essay specific features
| Issue: |
Business |
| Written by: |
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| Date added: |
October 2, 1998 |
| Level: |
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| Grade: |
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| No of pages / words: |
7 / 1775 |
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0 times |
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Essay content:
The highest level of utility with the given budget line is achieved with Xbar units of X and Ybar units of Y.
MRS= Absolute Value of -?Y/?X (this is the absolute value of the slope of the indifference curve).
MRS= |-12.50/10.00| = 1.25
F) At point A- the consumer can give up one unit of X for 1,25 more units of Y and utility will not change...
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Consumers can buy Px/Py more units of Y if 1 less unit of X is purchased on this budget line. This is more Y than is needed to be indifferent (Px/Py>MRS). Giving up one unit of X to get 1.25 more units of Y must increase utility.
At point B- Consumers would give up 1.25 units of Y to get 1 more unit of X and remain on the budget line, utility remaining unchanged...
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