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Suppose your friend's marginal rate of substitution is two pop for one ice cream bar at their present level of consumption. Their income is $100,
Suppose your friend's marginal rate of substitution is two pop for one ice cream bar at their present level of consumption. Their income is $100, the price of a pop is $ 2.00 and the price of an ice cream bar is $10.00. Is your friend maximizing their welfare?Why or why not? If not, what should they do?
Illustrate and carefully explain your answer with an economic explanation.
x = pop
y = ice cream
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