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In the following diagram, we show one of Janes indifference curves and her budget line a. If the price of good X is $100, wh

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Answer #1

A.If Jane spends all her income on X,she can buy 80 units of X

Price of X(Px)=100

Income=100*80=8000

B.Price of Y(Py)=Income/40

Price of Y=8000/40=200

Equation of budegt line:

Px*X+Py*Y=M

Where M=income.

C.slope of budget line=-Px/Py

Slope=-100/200=-1/2

D.Price of Y=200

E.MRS=-MUx/MUy

MUx is marginal utility of good X

MUy is marginal utility of good Y

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