Consider a consumer with utility u(x, y) = √xy . The consumer has $100 to spend, and the price of X is $5 and the price of Y is $2.
(1) Graph the budget line.
(2) Find the point that maximizes the consumers utility given the budget. Draw the indifference curve through this point.
(3) What are the expenditure shares?

    • 12 years ago
    ECO - Graph the budget line Solution
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