When The Optimal Point On An Indifference Curve And Budget Line Diagram Is A Corner Solution

The marginal rate of substitution between the two goods equals the ratio of their prices. B the consumer spends his or her entire budget on the two goods.

Homework 3 Solutions

At the optimal point on an indifference curve and budget line diagram interior solution a the optimal indifference curve is tangent to the budget line.

When the optimal point on an indifference curve and budget line diagram is a corner solution. When the optimal point on an indifference curve and budget line diagram is a corner. The budget line will become steeper. 3 when the optimal point on an indifference curve and budget line diagram is a corner solution a the budget line must have a kink in it.

C the marginal rate of substitution between the two goods equals the ratio of their prices. 1 when the optimal point on an indifference curve and budget line diagram is a corner solution. When the optimal point on an indifference curve and budget line diagram is a corner solution a.

The optimal indifference curve is tangent to the budget line when the optimal point on an ic and bl diagram is a corner solution the marginal rate of substitution does not equal the ratio of prices for the two goods. In case of concave indifference curves the consumer will not be in equilibrium at the point of tangency between budget line and indifference curve that is in this case interior solution will not exist. All of the above.

The slope of the budget line will change but in an indeterminate way. Any point on our budget line brown represents a point at which we will spend our entire budget. The budget line intersects with the point 22 along the pink indifference curve indicating that we can hire chris for 2 hours and sammy for 2 hours and spend the full 40 budget if we so choose.

The consumer spends his or her entire budget on the two goods. The consumer does not spend her entire budget on the two goods. The marginal rate of substitution usually does not equal the ratio of prices for the two goods.

The marginal rate of substitution usually does not equal the ratio of prices for the two goods. D the budget line becomes flatter. The budget line must have a kink in it.

Using indifference curves to think about the point on the budget line that maximizes total utility watch the next lesson. At the optimal point on an indifference curve and budget line diagram. The marginal rate of substitution usually does not equal the ratio of prices for the two goods.

B the marginal rate of substitution usually does not equal the ratio of prices for the two goods.

Econ302 Solutions For Practice Questions 4