Mark spent $80 to buy 10 cans of beer (good X) and 5 bottles of wine...

Mark spent $80 to buy 10 cans of beer (good X) and 5 bottles of wine (good Y) last week. Each can of beer cost Px and each bottle of wine cost Py. Suppose he is a utility maximizing agent.

1. Now, the price of one bottle of beer has increased by $1 and he has spent the same amount of money to buy 8 cans of beer and 5 bottles of wine. Find the price of beer before the change and the price of wine.

2. What is the MRS before the price change and after the price change?

Expert Solution

Rahul Sunny answered 1 year ago

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