practbudgetutility

practbudgetutility - University of Wisconsin Economics 301:...

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University of Wisconsin Economics 301: Intermediate Microeconomic Theory Korinna K. Hansen Practice Problems with Budget Constraints and Indifference Curves. Pretend that you are interested in consumers’ preferences about Burger King double-cheeseburgers (DCs) relative to “all of the other goods” (AOGs) they purchase. You discover that there are several distinct groups of people who have differing attitudes towards DCs and AOGs. Draw an indifference map that illustrates each set of preferences described below. Note that because each set of preferences is derived from a different utility function, each indifference map should be drawn on its own diagram. 1a). Some people get no utility at all from DCs, they get all of their utility from AOGs. 1b). Some people like both DCs and AOGs but have a stronger preference for AOGs than for DCs. 1c). Some people like both DCs and AOGs but have a stronger preference for DCs than for AOGs.
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This note was uploaded on 08/08/2008 for the course ECON 301 taught by Professor Hansen during the Spring '08 term at Wisconsin.

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practbudgetutility - University of Wisconsin Economics 301:...

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