a)
i)
Utility at A (3,9)=U(A)=3*9=27
Utility at B (2,8)=U(B)=2*8=16
Utility is higher for bundle A. So, Bundle A is preferred.
ii)
Utility at C (4.7)=U(C)=4*7=28
Utility at D (8,8)=U(D)=8*8=64
Utility is higher for bundle D. So, Bundle D is preferred.
iii)
Utility at E (5.20)=U(E)=5*20=100
Utility at F (10,10)=U(F)=10*10=100
Utility is equal at both bundles. So, consumer is indifferent to bundle E and bundle F
iv)
Utility at G (5.9)=U(G)=5*9=45
Utility at F (12,4)=U(F)=12*4=48
Utility is higher for bundle F. So, Bundle F is preferred.
b)
Point with highest utility will be most preferred. Following is the list in order of preference
E, F | 100 |
D | 64 |
H | 48 |
G | 45 |
C | 28 |
A | 27 |
B | 16 |
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