Mitchell's money income is $150,the price of X is $2,and the price of Y is $2.Given these prices and income,Mitchell buys 50 units of X and 25 units of Y.Call this combination of X and Y bundle J.At bundle J,Mitchell's MRS is 2.At bundle J,if Mitchell increases consumption of Y by 1 unit,how many units of X must he give up in order to satisfy his budget constraint?
A) ½
B) 1
C) 2
D) 4

Question

Quizplus · Accepted Answer

Mitchell's budget constraint is $150, and he spends $100 on X (50 units * $2) and $50 on Y (25 units * $2). If he increases Y by 1 unit, he spends an additional $2, so he must give up 1 unit of X (worth $2) to maintain the budget constraint.

Mitchell's Money Income Is $150,the Price of X Is $2,and