Question

5. Harry Mazola [4.7] has preferences u = min (2x + y, x + 2y). Graph the u = 12 indifference curve. Mary Granola has preferences u = min (8x + y, 3y + 6x). Graph the u = 18 indifference curve.

6. A consumer with m = 60 is paying pY = 2. They must pay pX = 4 for the first 5 units of good x but then pay only pX = 2 for additional units. The horizontal intercept of the budget line is equal to __________. No diagram required. Show your work.

7. A consumer with m = 64 paying pY = 2, pX = 2 purchases x = 12, y = 8. There is a tX = 2 per-unit tax on good x so while pX = 2, the customer pays pX + tX = 4 per unit. Next month the per-unit tax will be eliminated, but replaced with a revenue equivalent lump-sum tax. The horizontal intercept of this budget line will be equal to No diagram required. Show your work.

Answer 1

In the first question we have to simply draw two indifference curve for different value of utility. In the second and third part of the question we have two find horizontal intercept of the budget constraint under different scenario.

For Mary granola indifference curve , I have drawn it using online tool and the indifference curve is eq1 line running from vertical axis till point (2,2) and from there eq2 running from there to horizontal intercept of that line.

where eq1 is 8x+y =18 and eq 2 is 3y+6x =18