2. (Figure 4.3) Which of the following statements is FALSE? Baskets of tomatoes I 10- 7.85 6 4.89 4 1.76 = 0 A B C 4 1.47 3.26 5.05 D 6 8 6.53 • U₂ U₁ 10 Bags of carrots Oa. Bundle C is preferred to bundle D. Ob. Bundle A is preferred to bundle C. Oe. Indifference curve U₂ provides a higher level of utility than indifference curve U₁. Od. The consumer is indifferent between bundle A and bundle D.

2. (Figure 4.3) Which of the following statements is FALSE? Baskets of tomatoes I 10- 7.85 6 4.89 4 1.76 = 0 A B C 4 1.47 3.26 5.05 D 6 8 6.53 • U₂ U₁ 10 Bags of carrots Oa. Bundle C is preferred to bundle D. Ob. Bundle A is preferred to bundle C. Oe. Indifference curve U₂ provides a higher level of utility than indifference curve U₁. Od. The consumer is indifferent between bundle A and bundle D.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5) Consider indifference curves for the consumption of milk and chocolates (you may assume that both are 'goods'). The indifference curves are drawn with the number of chocolate bars on the horizontal axis and pints of milk on the vertical axis. Suppose that at every point, consumer A's indifference curve is flatter than consumer B's. What can you conclude about consumers A and B tastes and preferences?
4. Suppose the consumer's utility u: X → R is strictly conver-i.e. such that any x, y EX with ry and any 0 u(λx + (1 − A)y). (a) Show that the consumer will do one of the following: . Buy nothing. . Spend all their money on good 1. • Spend all their money on good 2. [Hint: The previous question could be helpful.] (b) Suppose that, in addition to behig strictly convex, u is increasing. Explain why the consumer will spend all their money on one good.
Figure#4 Indiflereocetur
4. The following questions refer to the following graph of a consumer's indifference curve. a. b. Quantity of Y 40 30 20 10 0 T I A 10 C B 1 20 30 40 Quantity of X X What is the consumer's marginal rate of substitution between points A and C? At point C, approximately what is the consumer's marginal rate of substitution at point?
4- An indifference curve connects points on a graph representing different quantities of two goods, points between which a consumer is indifferent. Food Clothing a) Danyal is obsessed with food and clothes. Assume you have no knowledge of the budget line, what point would Danyal prefer to be at. b) Why can't two indifference curves not intersect, explain and illustrate your answer. c) As we move from point c to f, who's marginal rate of substitution declines.