Question

Plot some of indifference curves in a graph for an individual in each of the following twogood scenarios.

(i) Good x: Energy; good y: car. (ii) Good x: Blue eraser; good y: Red eraser.

3.2) In each case, propose a utility function that would capture the individual’s preferences between the two goods.

3.3) In each case, Use the utility function to construct a preference ordering over the following bundles: A = (5,5), B = (1,9), C = (8,8).

i need 3.3 answered please

Answer 1

Answer 3.3

(i) Good x: Energy; good y: car.= These two goods are complementary goods.

Utility function= Min(x,y)

A = (5,5), B = (1,9), C = (8,8).

(ii) Good x: Blue eraser; good y: Red eraser.= These two goods are substitute goods.

Utility function= x+y

A = (5,5), B = (1,9), C = (8,8).