MGAB03H3 Study Guide - University Of Toronto Scarborough, Indifference Curve, Negative Number
Document Summary
Ecmb02: price theory: a mathematical approach (intermediate microeconomics i) , the corner solution will be either all x or all y depending on: that is only true if both individuals are characterized by a convex indifference curve. If either one is characterized by perfect substitute or perfect complement indifference curve then the statement will not be true. Therefore, uncertain: false: since whether the relative price is less than 3 or more than 3: 2: equation for the budget line is: xpi. 25: this will create a kink on the budget line. There will be a new line parallel to the x1 axis for a length of 5 units: 20x + 25y=100 with i=100, px=20, py=25: transform budget constraint. 0 = 20x + 25y -100: build the lagrangian. L(x,y, ) = xy - (20x + 25y -100: calculate partial derivatives for x, y, and and set them equal to zero, solve for x and y.
