Draw some indifference curves in a two-commodity world where each of the commodity can be good...

  

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Draw some indifference curves in a two-commodity world where each of the commodity can be "good" or "bad". In each case, comment on whether you expect decreasing marginal rate of substitution to occur and explain the interpretation of the meaning of the marginal rate of substitution. Sketch each case twice, once putting the first commodity stated on the vertical axis and then putting it on the horizontal axis. (a) I like both Pepsi and coke but have a more intense preference for coke. Yet I prefer an "average" bundle of both drinks to bundles made up mostly of Pepsi or coke. (b) I hate spinach but love candy. To get me to eat more spinach and not be made worse off, I must get more and more candy. (c) I like both real sugar and artificial sweeteners. It seems to me that 1 teaspoon of artificial sweeteners always equals 3 teaspoons of real sugar. (d) I love both brownies and potato chips. The more brownies I eat, the more I am willing to sacrifice to get one more brownie (and not be made worse off). The more potato chips I eat, the more I am willing to sacrifice to get one more potato chip. Draw some indifference curves in a two-commodity world where each of the commodity can be "good" or "bad". In each case, comment on whether you expect decreasing marginal rate of substitution to occur and explain the interpretation of the meaning of the marginal rate of substitution. Sketch each case twice, once putting the first commodity stated on the vertical axis and then putting it on the horizontal axis. (a) I like both Pepsi and coke but have a more intense preference for coke. Yet I prefer an "average" bundle of both drinks to bundles made up mostly of Pepsi or coke. (b) I hate spinach but love candy. To get me to eat more spinach and not be made worse off, I must get more and more candy. (c) I like both real sugar and artificial sweeteners. It seems to me that 1 teaspoon of artificial sweeteners always equals 3 teaspoons of real sugar. (d) I love both brownies and potato chips. The more brownies I eat, the more I am willing to sacrifice to get one more brownie (and not be made worse off). The more potato chips I eat, the more I am willing to sacrifice to get one more potato chip.

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