A consumer has the indifference map shown below. The market prices of and are $24 and $8,…

A consumer has the indifference map shown below. The market prices of  and  are $24 and $8, respectively. The consumer has $120 to spend on goods  and .

a. Construct the consumer’s budget line and find the utility-maximizing consumption bundle. Label this bundle “”. Bundle  is composed of ____________ units of  and ____________ units of

b. For bundle, the marginal rate of substitution is________ (greater than, less than, equal to) the slope of the budget line (in absolute value). The ratio  for good  is ________ (greater than, less than, equal to) the ratio  for good

c. Bundle ________ (is, is not) a corner solution.
Now suppose the consumer’s income and the price of  remain the same, but the price of  decreases to $8.

d. Construct the new budget line and find the new utility-maximizing consumption bundle. Label this bundle. Bundle  is composed of units’ of________  and ________units of

e. For bundle, the marginal rate of substitution is ________ (greater than, less than, equal to) the slope of the budget line (in absolute value). The ratio  for good  is________ (greater than, less than, equal to) the ratio  for good .

f. Bundle  __________(is, is not) a corner solution.