Question
1. Narita wants to spend JPY100 to buy mangoes and bananas. The price of mangoes is JPY20/kg, while the price of bananas is JPY10/kg.
1. Narita wants to spend JPY100 to buy mangoes and bananas. The price of mangoes is JPY20/kg, while the price of bananas is JPY10/kg. (25 points) a. Express Narita's budget line mathematically and plot it on a diagram (with mangoes (M) on the vertical axis and bananas (B) on the horizontal axis). Explain the information you get from the equation and the diagram. (10 points) b. If Narita's marginal rate of substitution is MRS = dM = dB M 4B Calculate and show the most optimal combination of mango and banana purchase for Narita in the diagram. (15 points)
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Get StartedRecommended Textbook for
Intermediate Microeconomics
Authors: Hal R. Varian
9th edition
978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968
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