1- Create a consumer model that shows how economists explains the consumer choice between two products (X & Y) that maximize the consumer's utility. Do not use numbers. Just graphs and detailed explanation for the dynamics of the model. 2- Show why the equilibrium point (tangency) shows the utility maximizing bundle of X & Y and that any other point will not reflect a bundle that maximize consumers utility. Explain the income and substation effect.
1- Create a consumer model that shows how economists explains the consumer choice between two products (X & Y) that maximize the consumer's utility. Do not use numbers. Just graphs and detailed explanation for the dynamics of the model. 2- Show why the equilibrium point (tangency) shows the utility maximizing bundle of X & Y and that any other point will not reflect a bundle that maximize consumers utility. Explain the income and substation effect.
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.4P
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M8
![1- Create a consumer model that shows how
economists explains the consumer choice between
two products (X & Y) that maximize the consumer's
utility. Do not use numbers. Just graphs and
detailed explanation for the dynamics of the
model.
2- Show why the equilibrium point (tangency)
shows the utility maximizing bundle of X & Y and
that any other point will not reflect a bundle that
maximize consumers utility. Explain the income
and substation effect.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F36595e4f-8dae-43cf-8e67-6fbb74f1a3bb%2F00c5bb8f-d845-4ea2-a4f6-b17566e57c06%2Fylz3579_processed.jpeg&w=3840&q=75)
Transcribed Image Text:1- Create a consumer model that shows how
economists explains the consumer choice between
two products (X & Y) that maximize the consumer's
utility. Do not use numbers. Just graphs and
detailed explanation for the dynamics of the
model.
2- Show why the equilibrium point (tangency)
shows the utility maximizing bundle of X & Y and
that any other point will not reflect a bundle that
maximize consumers utility. Explain the income
and substation effect.
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