Price indifference curves are iso-utility curves with the prices of two goods on the X- and Y-axes, respectively. Thus, they have the following general form: (p,, P2)lv(p1» P2» I) = vo- a. Derive the formula for the price indifference curves for the Cobb-Douglas case with a = B = 0.5. Sketch one of them. b. What does the slope of the curve show? c. What is the direction of increasing utility in your graph?

Price indifference curves are iso-utility curves with the prices of two goods on the X- and Y-axes, respectively. Thus, they have the following general form: (p,, P2)lv(p1» P2» I) = vo- a. Derive the formula for the price indifference curves for the Cobb-Douglas case with a = B = 0.5. Sketch one of them. b. What does the slope of the curve show? c. What is the direction of increasing utility in your graph?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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