A consumer is choosing among bundles of two goods. Their utility function is u = x1...

A consumer is choosing among bundles of two goods. Their utility function is u = x1 − x2. They have cashm = 20 and the prices are p1 = 5 and p2 = 4. Sketch their budget set. Indicate their optimal choice of bundle. Sketch a couple of their indifference curves, including the one that passes through their optimal choice.

Expert Solution

Rahul Sunny answered 2 years ago

Assume a consumer has the utility function U (x1 , x2 ) = ln x1 +...

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