2. (10 points) Suppose you know the following information (where I = the consumer's income): I= PxX + PyY, and I = $40,

[answerhappygod]

2 10 Points Suppose You Know The Following Information Where I The Consumer S Income I Pxx Pyy And I 40 1 (39.08 KiB) Viewed 33 times

2. (10 points) Suppose you know the following information (where I = the consumer's income): I= PxX + PyY, and I = $40, Px = $6.00, Py = $2.00, and good Y is the numeraire (or unit of account), answer the following questions (To receive full credit, you need to explain how derive your answers): a. What is the consumer's marginal opportunity cost of X? Explain. b. If a representative consumer's marginal willingness to trade Y for X (MBX) schedule is given as: MBx MCx Net MBX Consumer Surplus of X 6 5 4 2 6 1 i) What is the optimal amount of X consumed? Explain. ii) What is optimal (dollar) expenditure on X? Explain. iii) What is the optimal amount of Y consumed? Explain. iv) What is the total consumer surplus (wellbeing) generated for different levels of X consumed? Explain. X 1 2 3 4 5 3