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There are two goods 1 and 2. Denote by (x1; x2) the consumption bundle consisting of x1 units of good 1 and x2 units of good 2. A consumer has preferences that described by the linear utility function:
u(x1; x2) = x1 + 2x2:

1. Write down the equation for the indierence curve that passes through the consumption bundle (2; 1).Draw that indierence curve in a diagram with x1 on the horizontal axis and x2 on the vertical axis. In the same diagram, draw the indierence curve along which the consumer's utility is.

2. Determine the marginal rate of substitution (MRS)

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9487403

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