00:01
For a, we are given that our consumer's budget constraint is given by 40x1 plus 20x2 is equal to 200.
00:10
We can rearrange this as x2 is equal to 10 minus 2x1.
00:17
This is going to be a straight line with a slope of negative 2 and a y -intercept or b of 10.
00:26
For our graph, we are going to see our point is going to start at 0, 10 and we are going to slope downwards, crossing here at 5, 0.
00:35
So our line will look like that.
00:38
For b, our marginal rate is our rate at which our consumer is willing to trade.
00:44
It is equal to our ratio of our marginal utilities.
00:48
However, if we look at our consumption bundle, this is going to equal 40 divided by 20, which is 2.
00:56
This means that a consumer is willing to give up 2 units of goods for each additional unit of good x1 while maintaining the same level of satisfaction...