Explain the opportunity cost of good 1 in terms of good, Ask an Expert

Economics

a) Assume M=8, P1=4, P2=2. Graph the budget set for this consumer.

b) describe the opportunity cost of good 1 in terms of good 2.

c) Find out the opportunity cost of good 1 at the point where x1=1.

d) Does opportunity cost of 1 change as we move along the budget line? describe.

e) Now assume that M=16, P1=2, P2=4. Graph consumer's budget set in this case

f) Can we rank these budget sets in terms of which is better for the consumer? Describe.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M922714

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