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In: Economics

In a two goods (x and y) world, two districts (A and B) are identical, except...

In a two goods (x and y) world, two districts (A and B) are identical, except the price of good x (Px) is higher in district A. Suppose two identical individuals (i.e. same preferences and income) live in the two districts separately and their optimal choices are interior solutions. Evaluate the following statement: ‘The MRS at the optimal choices of two individuals can be the same’. True, false, or uncertain? Explain your answer intuitively and graphically.

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Rahul Sunny answered 1 year ago
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