From the hypothetical data, show the graphical solution of an indifference map based on the level of indifference curve schedule. Table 2. Indifference Map Schedule Points Indifference Curve l (IC1) Indifference Curve 2 (IC 2) Indifference Curve 3 (IC 3) Qx Qy Qx Qy Qx Qy A 1 20 3 20 5 24 B 2 10 4 14 6 18 C 3 6 5 10 7 14 D 4 5 6 8 8 12 E 5 4 7 7 9 11 F 6 3 8 6 10 10
Marginal Rate of Technical Substitution
MRTS reaches a manufacturer when a part of the product is lowered to sustain the manufacturing level when the other part is extended. It is the level of the quantity that is lowered when one extra volume is used, and the output is unchanged.
Preferences and Utility Analysis
Before understanding what is preference and utility analysis, it is very important to understand the terms preference and utility separately.
From the hypothetical data, show the graphical solution of an indifference map based on the level of indifference curve schedule.
Table 2. Indifference Map Schedule
|
Points |
Indifference Curve l (IC1) |
Indifference Curve 2 (IC 2) |
Indifference Curve 3 (IC 3) |
|||
|
Qx |
Qy |
Qx |
Qy |
Qx |
Qy |
|
|
A |
1 |
20 |
3 |
20 |
5 |
24 |
|
B |
2 |
10 |
4 |
14 |
6 |
18 |
|
C |
3 |
6 |
5 |
10 |
7 |
14 |
|
D |
4 |
5 |
6 |
8 |
8 |
12 |
|
E |
5 |
4 |
7 |
7 |
9 |
11 |
|
F |
6 |
3 |
8 |
6 |
10 |
10 |
- Explain the graphical implication if IC3 shift to the left.
- Explain the graphical implication if IC1 shift to right.
- Explain the graphical implication if IC2 shift to the right
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