Answer to Question #135236 in Microeconomics for Michelle Maina

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Question:
A consumer has preferences over two goods represented by the utility function u(x,y) = ln(x) + .5y, an endowment e(x,y) = (ex, ey) and facing prices px, p.

-Suppose the consumer's endowment is not at her optimal consumption point, and that after trading she would be a net buyer of good y. Draw the budget constraint and two indifference curves: one through her endowmnet point, and the other through her optimal consumption bundle.

Answer 1

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