1. Suppose that James only consumes two things: pizza and beer. For one possible bundle (A), containing 2 pizzas and 10 beers, his MRSPB= - 8. For a second possible bundle (B), containing 6 pizzas and 4 beers, his MRSPB= - 1/2. Those MRS’s are true only at these specific points, as MRS’s change at every point on the curve. Assume that Steve is indifferent between bundle A and bundle B. Draw the indifference curve, with pizza on the X-axis and beer on the y-axis, using information about the MRS to accurately capture the curvature of the indifference curve.
2. For the following sets of goods, draw two indifference curves, I1 and I2 where U2>U1. Draw each graph, putting the first good on the horizontal axis:
   1. Hamburgers and pizza (the consumer likes both and has a diminishing marginal rate of substitution of hamburgers for pizza)
   2. White sugar and Splenda (the consumer likes both and will accept a gram of sugar or a gram of Splenda with equal happiness)
   3. Peanut butter and jelly (the consumer likes exactly 2 ounces of peanut butter for every ounce of jelly)
   4. Sprinkles (which the consumer neither likes or dislikes) and ice cream (which the consumer likes)

Answer rating: 100% (QA)

MRS at point 210 is more than MRS at point 64 This means MRS is decreasing as the quantity of pizza ... View the full answer