CB-Session III

# CB-Session III - SessionIIIConsumer Behaviour PGPI Problem1...

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Session III -Consumer  Behaviour Microeconomics for Managers PGP-I

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Which of these utility functions are consistent with  convex indifference curve and which are not?  1. u(x, y)=2x+y   2. u(x,y)=(xy)1/2     {Cobb-Douglas }                                                     3. u(x, y)=Min(x, y) Problem 1
Sachin and Saurabh each plan to spend Rs.  20,000 on the styling and gas mileage features  of a new car.   They can each choose all styling,  all gas mileage, or   some combination of the  two.    Sachin does not care at all about styling  and wants   the best gas mileage possible.  Saurabh likes both   equally and wants to spend  an equal amount on   each.  Using indifference curves and budget lines,   illustrate the choice that each person will  make.   Problem 2 (PRM exercise 4. ch.  3)

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