a. Consider a different consumer who has much steeper indifference curves than those depicted in Figure 3A.1.

Question:

a. Consider a different consumer who has much steeper indifference curves than those depicted in Figure 3A.1. Draw a graph showing such curves. What do these curves imply about his relative valuation for good X versus good Y?

b. Using the curves from part a and the budget line in Equation 3A.1, graph the consumer’s optimal consumption bundle. How does his consumption bundle compare with that of the original consumer? Is it still true that MRS = PX∕PY = 2?

A Consumer’s Indifference Curves

Each indifference curve shows combinations of the goods that provide the consumer with the same level of welfare.