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Problems Involving Indifference Curves and Budget Lines

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Given a diagram (see attachment) of an indifference curve and a budget line:

a) Calculate the consumer's income.
b) Calculate the equation of her budget line.
c) Calculate the slope of her budget line.
d) Calculate the price of Good X.
e) Calculate the consumer's marginal rate of substitution in equilibrium.

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Solution Summary

This solution shows how to make detailed calculations based on a given diagram of a consumer's indifference curve and budget line. All the math is shown in full.

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a) If she spends all her money on Good X, she can buy 40 units of it. Her income must be (40 units)($100/unit) = $4000

b) If she spends all her money on ...

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