According to the following graph,at point A, The price of Y is $50.
A)the consumer can exchange two units of X for one unit of Y and keep utility unchanged.
B)the consumer can exchange two units of X for one unit of Y and keep income unchanged.
C)the consumer receives twice as much marginal utility from X as from Y.
D)both a and b
E)all of the above

Question

According to the following graph,at point A,  The price of Y is $50.
A)the consumer can exchange two units of X for one unit of Y and keep utility unchanged. 
B)the consumer can exchange two units of X for one unit of Y and keep income unchanged. 
C)the consumer receives twice as much marginal utility from X as from Y. 
D)both a and b 
E)all of the above

Quizplus · Accepted Answer

At point A, the price of Y is $50 and the price of X is $25. The slope of the budget line is -2, meaning that the consumer can exchange two units of X for one unit of Y while keeping income unchanged (thus choice B is correct).

However, we cannot determine whether the consumer will keep utility unchanged since we do not have information on the consumer's preferences. Therefore, we cannot choose A.

Similarly, we cannot determine whether the consumer receives twice as much marginal utility from X as from Y based on the graph alone. Therefore, we cannot choose C.

Thus, the best choice is D.

According to the Following Graph,at Point A, the Price