ans to problem set2 f07

# Intermediate Microeconomics: A Modern Approach, Seventh Edition

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2. Draw indifference curve maps containing at least two indifference curves for the following descriptions of preferences and indicate the direction in which happiness is increasing. (Note, not all these individuals will have nicely behaved preference, in fact, maybe none of them do.) a. Ima Slacker loves to go shopping for “all other goods” and dislikes working. She has strictly convex preferences between “all other goods” and working. b. James Bond’s favorite drink is a Vodka Martini, shaken, not stirred. His personal perfect recipe is to always use 1 part vodka to 3 parts gin. c. Jane describes nirvana as exactly 1 piece of cheesecake with ¼ cup of raspberry sauce. d. Mikko cares about road quality in Oulu Finalnd and could care less about road quality in Ithaca New York. [ANSWER] (a) (b) Working All other goods IC0 IC1 Vodka (part) Gin (part) IC0 1 3 0 IC1 (c) (d) 2 Cheesecake (piece) Raspberry (cup) IC0 1 1/4 0 IC1 Oulu Ithaca IC0 0 IC1 IC2
3. Al derives utility from 3 goods: music (M), wine (W), and cheese (C). His utility function is given by: u(M,W,C) = MWC a. Assuming Al's consumption of music is fixed at 10, sketch the indifference curves between W and C

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## ans to problem set2 f07 - Econ 301 F07 ANSWERS to PROBLEM...

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