Draw possible indifference maps between the following: Two...

Question

Draw possible indifference maps between the following:

Two goods.
A good and a bad.

A good and a neuter.

A good and a commodity that is a good up to a point, but then becomes a bad.

7. What are the four essential properties of indifference curves between two goods? Explain

he justification for each of the four properties.

4. For “His Income” and “My Income” regarded as goods, what shape for the indifference curves would correspond to the Golden Rule (“Love thy neighbor as thyself”)?

3.a. What is the “budget line”?

What is its equation?
What determines the slope of the budget line?

†4. What is the geometrical condition for the optimum of the consumer? (Distinguish between a corner solution and an interior solution.)

12. Show how an individual’s demand curve can be derived from the Price Expansion Path

1. a. Describe an experiment that might reveal an individual’s Marginal Rate of Substi- tution in Consumption between two goods.

b. Describe how an experiment might reveal Marginal Utility for either good.

David · Accepted Answer

1) Below is the indifference curve between a good and a bad good
2) Properties of indifference curves between two goods 
a) IC curves slope downward to the right - This property is based on the assumption that when the 
consumption of good 1 increased, the consumption of good 2 must fall. 
b) IC curve are convex to origin - This property is based on the assumption that marginal rate of 
substitution of good 1 for good 2 fall as more and more amount of good 1 is substituted for good 2.  
c) IC curve cannot cross each other - This property is based on the assumption that a IC curve shows 
combination of points on which a person total utility remains constant therefore, they cannot 
intersect.

Draw possible indifference maps between the following: Two goods. A good and a bad. A good and a neuter. A good and a commodity that is a good up to a point, but then becomes a bad. 7. What are the...

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