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If we observe several … choices it may be possible to estimate a utility function that would generate that sort of choice behavior. Such a utility function can be used to predict future choices and to estimat... If everyone faces the same prices for the two goods, then everyone will have the … marginal rate of substitution, and will thus be willing to trad The optimal choice of goods 1 and 2 at some set of prices and income is called the The demand function is the function that relates the optimal choice—the quantities demanded—to the different va Quantity tax is a tax on the amount consumed of a good, like a gasoline tax of 1