Show how the consumers opportunity set changes if income, Ask an Expert

Economics

A consumer has $400 to spend on goods X and Y. The market prices of these two goods are Px=$10 and Py=$40.

a.What is the market rate of substitution between goods X and Y?

b.Illustrate the consumers opportunity set in a carefully labeled diagram.

c.Show how the consumers opportunity set changes if income increases by $400. How does the $400 increase in income alter the market rate of substitution between goods X and Y?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M974956

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