Suppose that Jones and Smith have each decided to allocate $1000 per year to an entertainment budget in the form of hockey games or rock concerts. They both like hockey games and rock concerts and will choose to consume positive quantities of both goods. However, they differ substantially in their preferences for these two forms of entertainment. Jones prefers hockey games to rock concerts, while Smith prefers rock concerts to hockey games. In the fiqure to the right, two indifference curves are drawn for Jones for successive levels of utility and two indifference curves are drawn for Smith for successive levels of utility. Smith's indifference curves are the blue (UB U28 pair Using the concept of marginal rate of substitution, explain why the two sets of curves are different from each other The indifference curves are different because U2R O A. Jones is willing to give up fewer rock concerts for an additional hockey game than Smith is. O B. Smith is willing to give up more rock concerts for an additional hockey game than Jones is. UR O C. Jones's marginal rate of substitution is larger than Smith's. O D. Smith's and Jones's preferences violate the assumption of transitivity. O E. Jones's budget line is steeper than Smith's. Hockey Games Rock Concerts
Suppose that Jones and Smith have each decided to allocate $1000 per year to an entertainment budget in the form of hockey games or rock concerts. They both like hockey games and rock concerts and will choose to consume positive quantities of both goods. However, they differ substantially in their preferences for these two forms of entertainment. Jones prefers hockey games to rock concerts, while Smith prefers rock concerts to hockey games. In the fiqure to the right, two indifference curves are drawn for Jones for successive levels of utility and two indifference curves are drawn for Smith for successive levels of utility. Smith's indifference curves are the blue (UB U28 pair Using the concept of marginal rate of substitution, explain why the two sets of curves are different from each other The indifference curves are different because U2R O A. Jones is willing to give up fewer rock concerts for an additional hockey game than Smith is. O B. Smith is willing to give up more rock concerts for an additional hockey game than Jones is. UR O C. Jones's marginal rate of substitution is larger than Smith's. O D. Smith's and Jones's preferences violate the assumption of transitivity. O E. Jones's budget line is steeper than Smith's. Hockey Games Rock Concerts
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.15P
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Transcribed Image Text:Suppose that Jones and Smith have each decided to allocate $1000 per year to an entertainment budget in the form of
hockey games or rock concerts. They both like hockey games and rock concerts and will choose to consume positive
quantities of both goods. However, they differ substantially in their preferences for these two forms of entertainment.
Jones prefers hockey games to rock concerts, while Smith prefers rock concerts to hockey games.
In the fiqure to the right, two indifference curves are drawn for Jones for successive levels of utility and two indifference
curves are drawn for Smith for successive levels of utility.
Smith's indifference curves are the blue (UB U28 pair
Using the concept of marginal rate of substitution, explain why the two sets of curves are different from each other
The indifference curves are different because
U2R
O A. Jones is willing to give up fewer rock concerts for an additional hockey game than Smith is.
O B. Smith is willing to give up more rock concerts for an additional hockey game than Jones is.
UR
O C. Jones's marginal rate of substitution is larger than Smith's.
O D. Smith's and Jones's preferences violate the assumption of transitivity.
O E. Jones's budget line is steeper than Smith's.
Hockey Games
Rock Concerts
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