A consumer has the indifference map shown below.The market prices of X and Y are $20 and $50,respectively.The consumer has $500 to spend on goods X and Y.The utility-maximizing bundle ________ (is,is not)a corner solution because __________________.
A)is; the consumer spends all income on good X to buy 25 units of X.
B)is; the consumer spends all income on good Y to buy 37.5 units of Y.
C)is not; the consumer buys 5 units of X and 20 units of Y.
D)is not; MRS equals the slope of the budget line.
E)is not; MRS does not equal the slope of the budget line.

Question

A consumer has the indifference map shown below.The market prices of X and Y are $20 and $50,respectively.The consumer has $500 to spend on goods X and Y.The utility-maximizing bundle ________ (is,is not)a corner solution because __________________. 
A)is; the consumer spends all income on good X to buy 25 units of X. 
B)is; the consumer spends all income on good Y to buy 37.5 units of Y. 
C)is not; the consumer buys 5 units of X and 20 units of Y. 
D)is not; MRS equals the slope of the budget line. 
E)is not; MRS does not equal the slope of the budget line.

Quizplus · Accepted Answer

The Answer of A consumer has the indifference map shown below.The market prices of X and Y are $20 and $50,respectively.The consumer has $500 to spend on goods X and Y.The utility-maximizing bundle ________ (is,is not)a corner solution because __________________. 
A)is; the consumer spends all income on good X to buy 25 units of X. 
B)is; the consumer spends all income on good Y to buy 37.5 units of Y. 
C)is not; the consumer buys 5 units of X and 20 units of Y. 
D)is not; MRS equals the slope of the budget line. 
E)is not; MRS does not equal the slope of the budget line.

A Consumer Has the Indifference Map Shown Below