Quiz 5. Indifference Curves Ans

Quiz 5. Indifference Curves Ans - (4, 2) to (6, 0) and...

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Shomu Banerjee ECON 201 INDIFFERENCE CURVES ANSWERS 1. Yoshimitsu’s utility function over two goods x and y is given to be u ( x , y ) = x + min{ x , y }. Draw the indifference curve that gives him 6 units of satisfaction and show the direction in which Yoshimitsu’s utility is increasing. x y 4 2 0 6 8 4 2 6 First, note that (3, 3) gives Yoshimitsu a utility level of 6. Raising the quantity of y from 3 does not make him happier because of the ‘min’ part of the utility function—this gives the vertical red line. Finally, note that (4, 2) also gives him a utility level of 6. Extending the line from (3, 3) through
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Unformatted text preview: (4, 2) to (6, 0) and checking to make sure that those points give the same utility completes the construction of the indifference curve. 2. Mitsunaris utility function over commodities x and y is given by the utility function u ( x , y ) = 4 y- 2 x . Draw the indifference curve that gives him 4 units of satisfaction and show the direction in which Mitsunaris utility is increasing. x y 4 2 6 8 4 2 6 Set 4 y- 2 x = 4, which yields the equation for the indifference curve that gives utility level 4: y = 1 + (1/2) x ....
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