Joe's indifference map for lobster and soda is shown in the above figure along with his budget line. Will Joe choose point a? Explain your answer in terms both of MRS and the level of utility
What will be an ideal response?
Joe will not choose point a. Since the slope of his budget line tells us that he must give up only 9 sodas to get a lobster, Joe will wish to buy more lobsters and less soda than bundle a provides. From a utility standpoint, Joe will not choose point a because another bundle that lies on a higher indifference curve is obtainable.
You might also like to view...
When a U.S. firm sells a good abroad for, say, 100 euros (assume $1.5=1euro), U.S. net exports increase by $150. These $150 in exports can be accounted for as $150 increase in capital outflow because ________
A) private consumption in the foreign country increases by $150 B) if the U.S. firm uses the 100 euros to buy a share of stock in a foreign firm, the firm is supplying U.S. capital to that foreign firm C) if the U.S. firm uses the proceeds to buy a U.S. bond, capital investment in the foreign country has increased D) all of the above E) none of the above
According to the EPA, using known and available technology, what percentage of the current air and water pollution could be eliminated with current resources?
A. 25 percent. B. 75 percent. C. 10 percent. D. 95 percent.