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Unformatted text preview: Using the above example, show which of the three assumptions is violated for the indifference preference relation. 2. Plot three indifference curves for 5 dollar bills and 1 dollar bills. 3. Peter sends all his money on bells and whistles. His indifference curves take the form 1 1 2-= ax x where a is any constant. In the particular case of a=24 he is indifferent between the following pairs of (bells, whistles): (4,6), (8,3), (12,2). Sketch the indifference curve that passes through these three points. What is the MRS at (4,6)? What is the MRS at (8,3)? What is the MRS at (12,2)?...
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- Spring '10
- Utility, frank, preference relation, weak preference relation