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Antonio has strictly convex preferences. He is considering buying a bundle A with positive amounts of good X and good Y. Bundle A costs all of his income and the prices are Px=1 and Py=2. At bundle A his MRS=-3/4.

a. If you were to offer advice to Antonio would you tell him to buy more x and sell back some y or buy more y and sell back more x or to do nothing since he is already maximizing his utility. Explain.

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Namita kumari
Namita kumariLv6
28 Sep 2019

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