A. Larry likes apples and bananas. His preferences are monotonic and non-convex. Graph an indifference curve. Shade the preferred set. Are his preferences well behaved? explain B. Lizzy's utility is given by U=min(3X,4Y). If Px=Px=1 and m=70, show her optimal consumption on the graph (budget line and indifference curve). C. Mary considers Rice to be a Giffen good. The graph below shows her optimal bundle last year. This year the price of rice increased. Represent Mary's new budget line and new optimal bundle chicken 4 2 2 4 6 8 Rice

A. Larry likes apples and bananas. His preferences are monotonic and non-convex. Graph an indifference curve. Shade the preferred set. Are his preferences well behaved? explain B. Lizzy's utility is given by U=min(3X,4Y). If Px=Px=1 and m=70, show her optimal consumption on the graph (budget line and indifference curve). C. Mary considers Rice to be a Giffen good. The graph below shows her optimal bundle last year. This year the price of rice increased. Represent Mary's new budget line and new optimal bundle chicken 4 2 2 4 6 8 Rice

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A B C

**A.** Larry likes apples and bananas. His preferences are monotonic and non-convex. Graph an indifference curve. Shade the preferred set. Are his preferences well behaved? Explain.

**B.** Lizzy’s utility is given by $ U = \min(3X, 4Y) $. If $ P_x = P_y = 1 $ and $ m = 70 $, show her optimal consumption on the graph (budget line and indifference curve).

**C.** Mary considers rice to be a Giffen good. The graph below shows her optimal bundle last year. This year the price of rice increased. Represent Mary’s new budget line and new optimal bundle.

### Graph Description:
- **Axes:** The horizontal axis represents rice, and the vertical axis represents chicken.
- **Curve:** The graph shows a downward-sloping curve depicting the relationship between the consumption of chicken and rice. Last year’s optimal bundle is marked at the intersection of the budget line and the curve.

**Task:** Adjust the budget line downwards to reflect increased rice prices and determine Mary’s new optimal bundle.

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