Consider a consumer who has a perfect complement preference on a two goods consumption bundle (2,...

 

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Consider a consumer who has a perfect complement preference on a two goods consumption bundle (2, y), with his utility function u(z, y) = min(6x, 3y), where r is the quantity for first good, y is the quantity for second good. (a) Plot the utility indifference curve u(r, y) point on this curve. Hint: the important point of the curve should be its verter. = 6 on the r-y plane, and mark the coordinate of the important (b) Plot another two indifference curves which have higher utility level, and point out the direction in which the utility increase. Moreover, can you find out the ratio between c and y for the vertexes on these indifference curves? (c) Suppose this consumer has a total income (budget) I = 10 dollar, the price for first good pz = 2, and the price for the second good py = 1. Write out the budget constraint and then mark the area inI- y plane where his consumption is feasible (i.e., the area of his budget set). d) Combine two graphs in (b) and (c) to plot the optimum consumption bundle for this consumer, and what is the optimal quantity for first good r and quantity for second good y*. (Hint: use the ratio between e and y for the vertex on indifference curve.) %3D %3D Consider a consumer who has a perfect complement preference on a two goods consumption bundle (2, y), with his utility function u(z, y) = min(6x, 3y), where r is the quantity for first good, y is the quantity for second good. (a) Plot the utility indifference curve u(r, y) point on this curve. Hint: the important point of the curve should be its verter. = 6 on the r-y plane, and mark the coordinate of the important (b) Plot another two indifference curves which have higher utility level, and point out the direction in which the utility increase. Moreover, can you find out the ratio between c and y for the vertexes on these indifference curves? (c) Suppose this consumer has a total income (budget) I = 10 dollar, the price for first good pz = 2, and the price for the second good py = 1. Write out the budget constraint and then mark the area inI- y plane where his consumption is feasible (i.e., the area of his budget set). d) Combine two graphs in (b) and (c) to plot the optimum consumption bundle for this consumer, and what is the optimal quantity for first good r and quantity for second good y*. (Hint: use the ratio between e and y for the vertex on indifference curve.) %3D %3D

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Answer 14 12 A 1... View the full answer