a. A consumer is willing to trade 3 units ofxfor 1 unit ofywhen she has 6 units ofxand 5 units ofy. She is also willing to trade in 6 units ofxfor 2 units ofywhen she has 12 units ofxand 3 units ofy. She is indifferent between bundle (6, 5) and bundle (12, 3). What is the utility function for goodsxandy?Hint:What is the shape of the indifference curve?
b. A consumer is willing to trade 4 units ofxfor 1 unit ofywhen she is consuming bundle (8, 1). She is also willing to trade in 1 unit ofxfor 2 units ofywhen she is consuming bundle (4, 4). She is indifferent between these two bundles. Assuming that the utility function is Cobb–Douglas of the formU(x,y) =xαyβ, where α and β are positive constants, what is the utility function for this consumer?
c. Was there a redundancy of information in part (b)? If yes, how much is the minimum amount of information required in that question to derive the utility function?
3.8 Find utility functions given each of the following indifference curves [defined byU(・) =k]. .
Already registered? Login
Not Account? Sign up
Enter your email address to reset your password
Back to Login? Click here