Problem: Over the past couple years, medical costs have increased due insurance have not been covering all the procedures. In order of how rising medical costs have affected consumer alternatives....
Let x = represent quantity of medical services
Let y = represent the quantity of other goods
Also,
Let M = measured in hundreds of dollars, the price of medical services and other goods in terms of dollars per minutes.
M = 100, and P(x)=4, P(y)=5
1. Graph the budget line and determine the market rate of substitution?
2. Explain the illustrate the budget set?
3. Show in your graph whta happens to the budget constraints if P(x) incereases to $10.00 dollars?
4. What is the meaning of the slope of the two budget constraints?