Original ratio of marginal utilities new bundle is selected

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Suppose that a consumer realized the MU1/MU2 did not equal P1/P2 with the bundle of goods selected. Show and explain this case graphically using indifference curves and a budget constraint. Without increasing total expenditures, show and explain how utility can be increased by selecting a new bundle of X1 and X2. Include in your answer an explanation for the change in the original ratio of marginal utilities as a new bundle is selected

Reference no: EM13986807

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