Carl's budget constraint is 75 = 10X + 4Y.
a. How many units of good X can Carl afford?
b. What is the vertical intercept of the budget constraint?
c. What is the slope of the budget constraint?
d. Can Carl afford to buy 4 units of good X and 10 units of good Y?
e. If Carl's income increases by 10%, what happens to the slope of the budget constraint?
f. What is Carl's MRSXY at the utility-maximizing point?
Correct Answer:
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b. 75/4 = 18.75...
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