Question: She is indifferent between bundle (6, 5) and bundle (12, 3). What is the utility function for goods x and y? Hint: What is the

She is indifferent between bundle (6, 5) and bundle

(12, 3). What is the utility function for goods x and y? Hint: What is the shape of the indifference curve?

A consumer is willing to trade 4 units of x for 1 unit of y when she is consuming bundle (8, 1).

She is also willing to trade in 1 unit of x for 2 units of y when she is consuming bundle (4, 4). She is indifferent between these two bundles. Assuming that the utility function is Cobb–Douglas of the form U(x, y) = x α y β, where α and β are positive constants, what is the utility function for this consumer?

Was there a redundancy of information in part (b)?

If yes, how much is the minimum amount of information required in that question to derive the utility function?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Intermediate Microeconomics Questions!