B. Bob consumes two commodities: x and y (say, chocolate and classical music). More y never hurts, but in order to appreciate y he has to consume at least 4 units of it; put differently, he starts to enjoy y after the fourth unit. (In order to appreciate y he must first develop a taste for it.) Regardless of the amount of y he consumes, Bob thinks that more x is always strictly better than less. Moreover, he (strictly) prefers the bundle (x, y) over (x', y'), where both y and y' are at least 4, if and only if xxy>x' xy'. 1. Draw Bob's indifference curve(s) through the bundles: (2,6), and (6,2). (On each indifference curve indicate at least two bundles, one where the amount of y is less than 4 and one when this amount exceeds 4.) 2. Is Bob's preference convex? Is it strongly monotonic?

B. Bob consumes two commodities: x and y (say, chocolate and classical music). More y never hurts, but in order to appreciate y he has to consume at least 4 units of it; put differently, he starts to enjoy y after the fourth unit. (In order to appreciate y he must first develop a taste for it.) Regardless of the amount of y he consumes, Bob thinks that more x is always strictly better than less. Moreover, he (strictly) prefers the bundle (x, y) over (x', y'), where both y and y' are at least 4, if and only if xxy>x' xy'. 1. Draw Bob's indifference curve(s) through the bundles: (2,6), and (6,2). (On each indifference curve indicate at least two bundles, one where the amount of y is less than 4 and one when this amount exceeds 4.) 2. Is Bob's preference convex? Is it strongly monotonic?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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