Every week, Dave buys coffee and donuts to sustain his late night study habits. Suppose bundle “A...

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Every week, Dave buys coffee and donuts to sustain his late night study habits. Suppose bundle “A...

Every week, Dave buys coffee and donuts to sustain his late night study habits. Suppose bundle “A” consists of 20 donuts and 10 cups of coffee. Using the concept of marginal rate of substitution, answer the following questions (assume donuts are on the horizontal axis):

a. Suppose the slope of Dave’s Indifference curve through the bundle “A” is –2. Consider bundle “B” which consists of 19 donuts and 11 coffees. Does Dave prefer A to B, B to A, or is he indifferent between the two? Explain

b. If the slope of Dave’s indifference curve at “A” were -½ instead of –2, would your answer to part (a) change? Explain

business economics

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Answer 1

Answer #1

20, 10 will give up26eff.cup.- -t> Ala. e is mot of coffre Bnt at point oyo when Slope is-

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Answer 2

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1. Sketch indifference curves for each of the following consumers for a day’s worth of coffee...

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Every week, Dave buys coffee and donuts to sustain his late night study habits. Suppose bundle “A...

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1. Sketch indifference curves for each of the following consumers for a day’s worth of coffee...

2. Consider the following four consumers (C1,C2,C3,C4) with the following utility functions: Consumer Utility Function C1...

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Every week, Dave buys coffee and donuts to sustain his late night study habits. Suppose bundle “A...