Answer each of the following questions, all of which will require a sketch or graph. Rough sketches are fine, but for full credit, label all relevant axes, slopes, intercepts, and other important points.

1. A) Stan and Fran have preferences over the ham (h) and spam (s). At the bundle (2, 2), Stan is willing to trade 2 hams for 3 spams, while Fran is willing to trade 4 hams for 3 spams. On a single graph with ham on the horizontal axis and spam on the vertical axis, draw a possible indifference curve for Stan and one for Fran through the point (2, 2). Clearly, a label which indifference curve belongs to which person. If ph = $6 and ps = $9, is it possible that (2,2) is an optimal consumption bundle for Stan and/or Fran?

2. B) Nancy likes both tofu (t) and meat (m). She likes tofu more than meat, and, in particular, 2 pounds of tofu always gives her as much satisfaction as 3 pounds of meat. What is her utility function, Un(t,m)? Sketch her demand curve for tofu, assuming that Y = $18 and pm = $2. Label all key points.

Answer rating: 100% (QA)

A The indifference curves for Stan and Fran are shown below No it is not possib... View the full answer