The prices of goods x and y are each $1. Jane has $20 to spend and is considerin

Question

The prices of goods x and y are each $1. Jane has $20 to spend and is considering choosing 10 units of x and 10 units of y. Jane has nice convex preferences and more of each good is better for her. Where x is drawn on the horizontal axis and y is drawn on the vertical axis, the slope of her indifference curve at the bundle (10, 10) is –2.
a. The bundle (10, 10) is the best she can afford.
b. She would be better off consuming more of good x and less of good y.
c. She would be better off consuming more of good y and less of good x.
d. She must dislike one of the goods.
e. More than one of the above is true.

Explanation / Answer

B.) She would be better of consuming more of good x and less of good y

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