Question

2. Sam, like most of us, is the kind of person who is rather picky about having the shoes he wears on his right foot be designed for right feet and the shoes he wears on his left foot be designed for left feet. In fact Sam is so picky that he would never wear a left shoe on his right foot or a right shoe on his left foot, nor would he ever choose not to wear shoes on one of his feet.

1. (a) In a graph with the number of right shoes on the horizontal axis and the number of left shoes on the vertical, illustrate three indifference curves that are part of Sam’s indifference map.

(b) Now suppose Sam - active soccer player - hurt his left leg and have to wear a cast (which means he cannot wear shoes on his left foot) for 6 months. Illustrate how the indifference curves would change for this period. Can you think of why goods such as left shoes in this case are called neutral goods?

(c) Suppose Sam hurt his right foot instead. How would this change answer to part b)?

(d) In the three different tastes from parts a) - c), are any of the goods ever ”essential”? Are any not essential? Let x represent right shoes and let y represent left shoes.

(e) Write down a utility function that represents Sam’ s tastes as illustrated in a). Can you think of a second utility function that also represents these tastes?

Answer 1