Antonin notices he is currently spending all of his money on a bundle (x1, x2) where his marginal rate of substitution is greater than the relative prices (p1/p2). Can Antonin reach a bundle on a higher indifference curve with his current income? Explain clearly and provide a graph with your response.
Antonin notices he is currently spending all of his money on a bundle (x1, x2) where his marginal rate of substitution is greater than the relative prices (p1/p2). Can Antonin reach a bundle on a higher indifference curve with his current income? Explain clearly and provide a graph with your response.
Chapter6: Consumer Choice Theory
Section6.A: Indifference Curve Analysis
Problem 2SQ
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Antonin notices he is currently spending all of his money on
a bundle (x1, x2) where his marginal rate of substitution is
greater than the relative prices (p1/p2). Can Antonin reach a
bundle on a higher indifference curve with his current income?
Explain clearly and provide a graph with your response.
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