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Economics
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At the consumer's optimum:

  a.

the indifference curve will intersect the budget constraint at the midpoint of the budget constraint.
  b.

it is still possible for the consumer to increase his consumption of both goods.
  c.

the budget constraint will have a slope of MUx/Px.
  d.

the slope of the indifference curve is equal to the slope of the budget constraint.

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Related questions

Make sure you give complete definitions and explanations for this set of questions. When dealing with the decrease in income, you will want to talk about the effects on the budget constraint and the consumption bundle of the consumer. Remember, there are only two goods in the model!

What is a budget constraint? How does a budget constraint explain consumer choices when used in conjunction with indifference curves? Explain what happens if a household loses half of their income, using a budget constraint and indifference curves in your discussion.

20) When a consumer's marginal rate of substitution between X and Y is equal to the ratio of prices for X and Y, and when the consumer is spending all available income, then A) the budget line is tangent to an indifference curve. B) the consumer is not maximizing his utility. C) a higher indifference curve can be reached given the existing budget line. D) the budget line is tangent to the indifference curve at all quantities of X and Y. E) all budget lines are tangent to all indifference curves.

consider the following two-period model. The consumer has preferences given by: u(c,c')=ln c + ß ln c' where c is current consumption, c' is future consumption, and ß >0 is a discount factor. The consumer receives exogenous income y u tge current period and y' in the future period. The consumer pays proportional tax ts on savyings (i.e. the consumer saves s in the current period but only gets (1-ts) tomorrow). The consumer can save at the interest rate r.

a) Write down the consumer's budget constraint for the current period.

b) Write down the consumer's budget constraint for the future period.

c) Combine the two budget constraints above into one lifetime budget constraint

d) Solve the consumer's optimization problem for c and c'

e) Write down the tax revenue the government receives then imposing the tax on savings.

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