View the step-by-step solution to:


1.When (for what type of preferences) is MRS%? constant?

2.Most consumers in Ontario choose between

electricity (costing 9c per kWh) and natural gas (costing 12c per m3) to heat their homes. After criticism over rapid price increases, Ontario is providing residents with an 8% rebate on electricity rates. Draw the budget constraints for Ontarions before and after this price change. Be sure to label the diagram fully (axes, intercepts and slope).

Top Answer

1.Perfect substitutes have... View the full answer


Budget line when the prices of both the sources of heating change
Natural Gas
(M - e Pe )/Pm
(M - e P'= )/P'n
BL = BL before
price change
BL' = BL after
price change
(M - n Pin...

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question