3. An indifference curve is a convex curve that shows the combination of two goods which give the same utility to an individual. Draw and explain Bob's indifference map using food on the horizontal axis and "all other goods" on the vertical axis. Introduce and explain the budget line. Use the graph to explain Bob's utility maximizing choice of consumption. Show how the utility maximizing choice of consumption would change if the price of food fell.

3. An indifference curve is a convex curve that shows the combination of two goods which give the same utility to an individual. Draw and explain Bob's indifference map using food on the horizontal axis and "all other goods" on the vertical axis. Introduce and explain the budget line. Use the graph to explain Bob's utility maximizing choice of consumption. Show how the utility maximizing choice of consumption would change if the price of food fell.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 8P

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