Homework Answers
The correct option is b.) x1*/x2* = 0
MRS = MUx1/MUx2
MUx1 = 1
MUx2 = 2
MRS = 1/2
Price Ratio = Px1 /Px2 = 1 (Because both price are same)
MRS < Px1/ Px2
MUx1/Px1 < MUx2/Px2
Thus, x1*= 0
x2*= M/Px2
x1*/x2* = 0
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how can it be (b)?
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clear writing please
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