Question
A maximizing consumer with preferences u = x^1/2+ y^1/2 pays pY= 4 and pX= 4 and spends 24 dollars on these goods. Next month the
A maximizing consumer with preferences u = x^1/2+ y^1/2 pays pY= 4 and pX= 4 and spends 24 dollars on these goods. Next month the price of good y will fall to pY= 2. Provide an Indifference Curve Diagram to illustrate and quantify her optimal choices as Bundles A and B. Quantify all intercepts.
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Macroeconomics Theories and Policies
Authors: Richard T. Froyen
10th edition
013283152X, 978-0132831529
