1)
a)Explain what is meant by the terms indifference curve, the
marginal substitution fraction and the budget condition in consumer
theory.
b) The benefit to a consumer depends on the benefits x1 and x2 .
Explain why the consumer optimal choice of goods will not change if
the prices of the two goods double, if the income at the same time
also doubles.
c) A consumer has a utility function that depends on the goods x1
and x2. The goods...