Budget constraint and indifference curves, economics homework help

/in /by

Budget constraint and indifference curves, economics homework help

Graph with pizza on the x-axis and apples are on the y-axis. There is a straight line budget constraint sloping down and 3 upward concave indifference curves labelled U1, U2 and U3. U1 is closest to the origin (lowest utility) and intersects the budget constraint at point W. U2 is tangent to the budget constraint at pizza = 6 and apples = 30. This is point X. U2 also has a point Y labelled which lies beyond the budget constraint. U3 is the indifference curve furthest from the origin. It does not touch the budget constraint. It has a point Z labelled at pizza = 6 and apples = 50.

Based on the budget constraint and 3 indifference curves shown here we know that:

A. Apples and pizzas have the same price
B. Consumption bundles Y and X cost the same
C. Consumption bundles W provides greater utility than Y
D. Consumption bundles X and W cost the same