Question

1.suppose Jon faces the choice of how many good Y to buy.the price of good X is $20 and the price of good Y is $10.Jon's income is $200
a.write down the Jon's budget constraint
b.Draw the graph of the budget constraint.Assume X and Y are prefect substitutes and Jon's utility function is U（
X，Y）=X+Y，show how to find Jon's optimal choice with this budget constraint.What is the optimal consumption bundle？Make sure you label the indifferent curve and the budget constraint clearly
c）Now suppose the price of good X falls to $5，while the price of good Y and the income stay the sa

Answer 1

a) cost*#x + cost*#y <or = income

Answer 2

what do you have for a) ?

Answer 3

write down the Jon's budget constraint

Answer 4

yes