Assume an Individual Is Currently Using All of His Income

question 104

Essay

Assume an individual is currently using all of his income to consume two goods - X and Y.If the prices of X and Y are $3 and $8,respectively,and the marginal rate of substitution of X for Y is four,is this individual maximizing his net benefits from consumption? If not,what should he do to increase his total utility?

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Definitions:

Computer Software

Consists of programs, procedures, and routines associated with the operation of a computer system.

Tangible Assets

Physical and material assets that have value, such as machinery, buildings, and inventory, which can be seen, touched, and quantified.

Patents

Legal documents that grant the holder exclusive rights to a process, design, or new invention for a designated period of time.

Cash

Money in the form of coins and banknotes, which is used to carry out transactions.