Answer to Question #275825 in Microeconomics for armaan

Question #275825

The income available with her is INR60. And price of movie ticket is INR 10 and that of a book is INR 15. Will she spend her entire budget and why? What will be her consumption, explain why?

Expert's answer

Now here MRS = MUB/MUM = 2

And slope of budget line is, 15/10 = 1.5

Therefore,

MRS> PB/PM

And so only books will be consumed that is, B*= 60/15 = 4 units and M*= 0 unit's that is movies will not be consumed

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