Unformatted text preview: Vodka Water 1) Do these preferences satisfy the three basic axioms of consumer theory as stated in lecture? [Warning: here the IC are slightly thick but this is just to make them stand out more on the picture.] 2) What is the value of the MRS of water for vodka at any commodity bundle? 3) What is the value of the MRS of vodka for water at any commodity bundle? 4) Give an economic interpretation of these preferences. Exercise 5 The inhabitants of planet WEIRD have three legs and therefore three feet: two left and one right. They also like to wear shooes. Draw the indiFerence curves of the Weirdoites in the ( L,R ) space, where L is the number of left shoes and R the number of right shoes. [Hint: start from the bundle (1 , 2) and ±nd the indiFerent bundles. Proceed identically for bundle (4 , 2) .] 1...
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- Fall '08
- Microeconomics, indifference curves, Convex preferences