HW chap 4-9

Dorajspreferencessatisfythemoreisbetterprinciple yes

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 20 10 0 0 10 20 30 40 50 X Indifference curve A c. Do Raj's preferences satisfy the More­Is­Better Principle? Yes Explanation: a. See table above. b. To obtain the formula for Raj's indifference curve, divide both sides with X to isolate Y: Y = U(X,Y)/X. The utility function U(X,Y) = XY is an example of a Cobb­Douglas utility function which is convex to the origin as seen in curve A. c. As seen in the table above, Raj's preferences satisfy the More­Is­Better Principle because as long as X (or Y) goes up without a corresponding change in Y (or X), his utility goes up. http://e z to.mhe c loud.mc gr a w- hill.c om/hm.tpx? todo= pr intvie wSingle 7/7...
View Full Document

Ask a homework question - tutors are online