The condition for consumer utility maximization

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a. Using the equi-marginal principle and the condition for consumer utility maximization, please explain the effect on the consumption of gasoline when prices increase. You may assume that the utility of money is constant.

b. Perform the same analysis in (a) using indifference curves and budget constraints. Would the economic recovery and increasing incomes in 2012 have any effect on demand for gasoline? Support your answer with the indifference curve budget constraint model.

Reference no: EM131081783

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