Sample exercise International Bachelor Economics and Business Economics - BSc

The brochure on the International Bachelor in Economics and Business Economics contains a sample assignment that you can use to test your knowledge of this programme and see which kinds of assignments a student is likely to get.

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Answer to sample exercise of the International Bachelor Economics and Business Economics

Solution:

a. MRS = |_cinema/_theatre| = 3, slope indifference curve = −3 (indifference curve is a straight line).

b. Slope budget line is −12/4 = −3, which is exactly the slope as Paula’s indifference curves. She will be indifferent between all the bundles on the highest attainable indifference curve.

c. In this case, the slope of the budget line is less steeper than the slope of the indifference curve, which leads to a corner solution. Paula will visit 10 theatre shows.