Explain this budget constraint about the mrs at this point

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Reference no: EM1363438

A consumer has $240 to allocate between baseball tickets and hockey tickets. Assume that in any graphs involving quantities of both goods, baseball tickets go on the horizontal axis:

a) If the price of baseball tickets is $12 each and hockey tickets are $20 each, draw the budget constraint for the consumer. Be sure to specifically label each intercept.

b) Explain why (5, 9) is on this budget constraint but you cannot tell anything about the MRS at this point.

c) Now you know that (10, 6) is the utility maximizing point for this budget, explain why you can now tell that the MRS of (5, 9) is bigger or smaller than a specific number.

d) Now for a budget with different prices, the consumer with the same income chooses the bundle (12, 6). The bundle (10, 7) is also on this budget. Draw this new budget specifically labeling each intercept, and draw the indifference curve through the utility maximizing point.

Reference no: EM1363438

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