Question
Suppose a consumer's preferences are given by U(X,Y) = MIN (2X, 3Y). Suppose the price of good X (P X ) is $2, and the
Suppose a consumer's preferences are given by U(X,Y) = MIN (2X, 3Y). Suppose the price of good X (PX) is $2, and the price of good Y (PY) is $1. Sketch the income-consumption curve (ICC) for the following values of M:
- M = $160
- M = $240
- M = $320
To finish this, carefully draw the budget constraints associated with each of the income levels, and indicate the bundle that the consumer chooses in each case. Also, be sure to label your graph accurately.
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Using Econometrics A Practical Guide
Authors: A. H. Studenmund
7th edition
013418274X, 978-0134182742
