Question

Problem 1:

A. Rank the following for yourself, assuming the properties of preferences hold:

o Reading a book

o Watching a movie

o Playing a video game o Doing a puzzle

o Browsing Social Media

B. Choose two of the above activities and draw your indifference map for them. Do you consider the activities perfect substitutes, perfect complements or imperfect substitutes?

Problem 4:

If the utility function of a Burger Patch customer on a date is U(B,F) = 2B + F, where B is burgers and F is fries, what is the optimal pricing strategy given that the customer optimizes their utility? Given this utility function, are burgers and fries substitutes or complements?

Answer 1

A. The given preference can be ranked in the following manner:

1. Reading a book

2.Watching a movie

3.Browsing Social Media

4.Playing a video game o Doing a puzzle