Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 16

[Uses the Indifference Curve Approach] The appendix to this chapter states that when a consumer is buying the optimal combination of two goods x and y,then MRS y,x = P x / P y. Draw a graph,with an indifference curve and a budget line,and with the quantity of y on the vertical axis,to illustrate the case where the consumer is buying a non -optimal combination on his budget line for which MRS y,x P x / P y.