Question

needs to be solved asap please

L. The graph below shows a range of consumption bundles comprising Meals and Education. Meals 4 Education Which of the following preference relations are feasible? In case they are NOT feasible, state the assumption violated in each case. (2 points each) 1. DPA 2. CIA 3. DPB,BI E and DIE 4. DP BBP A and DPA II. Draw the indifference curves associated with each of the following preferences. The two goods are burgers and fries. Plot burgers along the horizontal axis and fries along the vertical axis. (2 points each) 1. You like both burgers and fries. 2. You like burgers but are indifferent towards fries. In other words, consuming fries does not increase your utility. 3. You like each burger with exactly two servings of fries. 4. You are happy to substitute each burger with exactly two servings of fries. III. Consider two goods, x and y that yield utility U to a consumer. Given P.45P4 and 1-200 determine the optimal consumption bundles (x,y) for the following marginal utilities or utility functions (2 points each): 1. MU, = 5y, MUY = 4x A. (40.82, 36.45) B. (29.64, 67.31) C. (22.22, 22.23) D. (49.12, 48.88)

i am attaching a full photo please go thoroughly through it and solve it

Answer 1

Number of questions solved as per Chegg guidelines.

II. Shape of IC curves

Fries (2) IC Burgers o Bщие Fries ICS тттттто - - 1С. 1 3 5 с ар 1 2 3 4 5 6 Вл

1. Since the consumer likes both burgers and fries, it is convex preferences. The IC is a downward sloping curve and convex in shape.

2. Since the consumer likes burgers (treated as good commodity) but is indifferent towards fries (treated as neutral good), the IC curve is a vertical line. This is so because the consumer is indifferent from utility of fries no matter what the quantity.

3. Since the consumer likes each burger with exactly two servings of fries, these are complementary goods. The L shaped IC curve denotes that both have to be taken together in 2:1.

4. The consumer substitutes each burger with two servings of fries, that is, these are substitute goods. Thus the IC is a downward sloping straight line ( that is constant MRS).