Good Y is on the vertical axis and good X is on the horizontal axis. If...

Good Y is on the vertical axis and good X is on the horizontal axis. If the slope of the indifference curve is steeper than the slope of the budget line then:

MRS < −P_X/P_Y.
the consumer is willing to give up more of good Y to get additional units of good X.
MRS < P_X/P_Y.
the consumer’s utility is maximized.
the consumer is willing to give up more of good X to get an additional units of good Y.

Solutions

Expert Solution

We know slope is change in Y/change in X

skope of Indifference curve is MRS and steeper the curve, more slope it has.

Thus slope of IC=MRS>Slope of Budget Line

Thus MRS>Px/Py

MRS is the number of units of Y sacrificed to gain an additional unit of X

Thus consumer is willing to give up more of good Y to get an additional unit of X

Thus ans is B

Rahul Sunny answered 1 year ago

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