Compute the utility loss relative to the case

Reference no: EM133659733

Problem: Now reintroduce the housing-consumption constraint, and consider the consumer's choices. The consumer could choose either to be homeless, setting q = 0, or to consume the smallest possible dwelling, setting g = 500. Compute the utility level associated with each option, and indicate which one the consumer chooses. Compute the utility loss relative to the case with no housing-consumption constraint. Illustrate the solution graphically, showing the indifference curves passing through the two possible consumption points.

Reference no: EM133659733

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