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When There Are Two Goods (X and Y),the Consumer's Optimum

Question 73

Essay

When there are two goods (X and Y),the consumer's optimum is typically found by locating the basket where the marginal value of X in terms of Y equals PX/PY.Explain in words what this equality means,and describe two situations where the consumer's optimum is not characterized by this equation.

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The marginal value of X measures the amo...

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