Question

1) On ONE sketch, show the indifference curves through the points (1,1) and (2,4) for the following utility functions (a) ua(x, y)-x+y (b) ub(x,y)-+2y (c) ue(x, y) 3 y

Answer 1

Indifference curve is the locus of the various combinations of 2 goods that give the consumer the same level of utility That means, the utility level will remain the same on an indifference curve Now, the utility derived at (1,1) will be: u_a (1,1) = 1 + 1 = 2 Here, the utility function for (1,1) will be: 2 = x + y This is because the utility should remain same throughout any point on the indifference curve Similarly, the utility derived at (2,4) will be: u_a (2,4) = 2 + 4 = 6 Here, the utility function for (2,4) will be: 6 = x + y This is because the utility should remain same throughout any point on the indifference curve Therefore, graph the indifference curves through the points (1,1) and (2,4) as follows \r\n Now, the utility derived at (1,1) will be: u_b (1,1) = 1 + 2 times 1 = 3 Here, the utility function for (1,1) will be: 3 =