The degree of convexity of an indifference curve depends upon the rate of fall in the marginal rate of substitution of X for Y. As stated above, when two goods are perfect substitutes of each other, the indifference curve is a straight line onwhich marginal rate of substitution remains consta...
whicharegoodsthataconsumerseesasbeingcompletelyequalandcapableoftakingtheplaceoftheotherandbeingequallywelloff.PerfectComplimentsFigure6.a.4showstheindifferencecurvesforCocoandMarshmallows.Thisconsumerconsidersthegoodstobeperfectcompliments,thatistheconsumercannothaveonewithouttheother.Coke(cans)Pepsi(cans)65432112345678...
Justify your answer. Q5.Suppose Joe's utility for lobster(L)and soda(S)can be represented asU=L0.5S0.5. a.Draw the indifference curve that yields a utility level of9. b.Calculate the MUL, MUS, and MRS ofLforSon ...
a. Joe has convex preferences and dislikes both hamburgers and soft drinks. Since Joe dislikes both goods, he prefers less to more, and his satisfaction is increasing in the direction of the origin.Convexity of preferences implies his indifference curves will have the normal shape in that they ...