1. Consider the utility function: u(x1,x2) = min[2x1 + x2, x1 + 2x2] (a) Draw the...

 

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1. Consider the utility function: u(x1,x2) = min[2x1 + x2, x1 + 2x2] (a) Draw the indifference curve for u(x1, x2) =20.Shade the area where u(x1, x2)20 (b) Draw several indifference curves. Draw the income offer curve for the following five cases separately: (4)/(5)> (1) >2, (2) = 2, (3) 2>> (4) = (5) > where P is the price of x and P that of x2. (c) A consumer with this preference has income of 20. Suppose P = P = 1. Solve for his optimal consumption bundle. Explain, in terms of the relationship between the MRS and the slope of the budget line, where the optimal consumption bundle you find is optimal. (d) A consumer with this preference has income of 20. The price of x2, P2, is 1. Draw his demand curve for x1. 1. Consider the utility function: u(x1,x2) = min[2x1 + x2, x1 + 2x2] (a) Draw the indifference curve for u(x1, x2) =20.Shade the area where u(x1, x2)20 (b) Draw several indifference curves. Draw the income offer curve for the following five cases separately: (4)/(5)> (1) >2, (2) = 2, (3) 2>> (4) = (5) > where P is the price of x and P that of x2. (c) A consumer with this preference has income of 20. Suppose P = P = 1. Solve for his optimal consumption bundle. Explain, in terms of the relationship between the MRS and the slope of the budget line, where the optimal consumption bundle you find is optimal. (d) A consumer with this preference has income of 20. The price of x2, P2, is 1. Draw his demand curve for x1.