By drawing indifference curves, show how an individual might consume at an interior point where indi
Question: By drawing indifference curves, show how an individual might consume at an interior point where indifference curves are non-convex if the consumer faces a rising marginal cost of \({{x}_{1}}\) in terms of \({{x}_{2}}\)
(a) What first- and second-order conditions apply to this point?
(b) Can you think of a market situation (think in particular about market structure) which could lead to such a result?
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Solution Format: Word Document
Solution Format: Word Document
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