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Unformatted text preview: information, it is simply a matter of finding out the maximum amount of the first good you can buy, without buying any of the second, then finding the maximum amount of the second good you can buy, without buying any of the first. Mark these points on the graph and connect them. To illustrate, suppose Tina has $100. She is deciding how many bottles of wine and how many wine glasses she wants to buy. If wine costs $20 a bottle and glasses cost $5 each, then the most wine she can buy is ($100/$20)=5 bottles. Likewise, she can buy at most ($100/$5)=20 wine glasses. Her budget constraint would look like the darker line, while the filled area includes all of her possible buying decisions, given the amount of money she has. Anything not included in the colored area is out of her budget:...
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This note was uploaded on 02/09/2012 for the course ECO ECO2013 taught by Professor Jominy during the Fall '08 term at Broward College.
 Fall '08
 JOMINY
 Microeconomics, Utility

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