1)
Charlie likes both apples and bananas.
He consumes nothing else.
The consumption bundle
where Charlie consumes “A” bushels of apples per year and “B” bushels of bananas per year
is written as (A, B).
Last year, Charlie consumed 20 bushels of apples and 5 bushels of
bananas.
Suppose Charlie tell us that the set of consumption bundles (A, B) such that he is
indifferent between (A, B) and the bundle (20, 5) is the set of all bundles such that
B = 100/A.
He also tells us that the set of bundles (A, B) such that he is just indifferent
between (A, B) and the bundle (10, 15) is the set of bundles such that B = 150/A.
a)
Putting units of bananas (B) on the vertical and units of apples (A) on the horizontal plot
several points that lie on the indifference curve that passes through the bundle (20, 5) and
sketch this indifference curve.
Do the same for the indifference curve passing through
the bundle (10, 15).
b)
Shade in the set of commodity bundles that Charlie weakly prefers to the bundle (10, 15).
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 Fall '06
 MASSON
 Microeconomics, Utility, Charlie

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