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Analysis of a Constrained Choice Problem
An individual is choosing between combinations of two desirable outcomes, which can be plotted on a graph. Their set of possible choices is represented by a downward-sloping 'feasibility' curve. Their preferences are represented by a series of 'satisfaction' curves, where any point on a given curve provides the same level of satisfaction. Consider a point where a satisfaction curve crosses (intersects) the feasibility curve. Explain why this point cannot represent the individual's best possible choice. In your explanation, compare the rate at which the individual is willing to substitute one outcome for the other with the rate at which they are able to do so at this intersection point.
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The Economy 2.0 Microeconomics @ CORE Econ
Ch.5 The rules of the game: Who gets what and why - The Economy 2.0 Microeconomics @ CORE Econ
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