Question: 5.5 As defined in Chapter 3, an indifference map is homothetic if any straight line through the origin cuts all indifference curves at points of
5.5 As defined in Chapter 3, an indifference map is homothetic if any straight line through the origin cuts all indifference curves at points of equal slope: The MRS depends on the ratio Y/X.
a. Prove that in this case dX/dlis constant.
b. Prove that if an individual's tastes can be represented by a homothetic indifference map, price and quantity must move in opposite directions; that is, prove that Giffen's paradox cannot occur.
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