Question
For each example below, draw a set of three indifference curves that represent the given preferences. Be certain to show the direction of increasing utility. Also write down a utility function that would be consistent with the given preferences and use that utility function to get expressions for the marginal utility
of each good.
c)Carl likes both burgers and hotdogs but experiences diminishing marginal utility of hotdogs and diminishing marginal utility of hamburgers.
d) Dennis likes both co ffee and cigarettes and both are addictive goods, meaning
that the more co ffee Dennis consumes, the more he's willing to pay to get an
additional cup of coffee and the more cigarettes he smokes, the more he is willing to pay for an additional cigarette.
Attempt:
c) For diminishing marginal utility, the indifference curves should look something like y = sqrt(x), but I'm not sure this is the correct function. Increasing utility should be up and to the left?
d) This one I have no idea how to do
of each good.
c)Carl likes both burgers and hotdogs but experiences diminishing marginal utility of hotdogs and diminishing marginal utility of hamburgers.
d) Dennis likes both co ffee and cigarettes and both are addictive goods, meaning
that the more co ffee Dennis consumes, the more he's willing to pay to get an
additional cup of coffee and the more cigarettes he smokes, the more he is willing to pay for an additional cigarette.
Attempt:
c) For diminishing marginal utility, the indifference curves should look something like y = sqrt(x), but I'm not sure this is the correct function. Increasing utility should be up and to the left?
d) This one I have no idea how to do
Answers
SraJMcGin
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