Henry's utility function is u(x,y)=max{x+3y,3x+y}. (a) Suppose Henry's current consumption bundle is (2,1.5), what is his current utility level? If he consumes the bundle (1.5,2), will his utility change from the current utility level?
Henry's utility function is u(x,y)=max{x+3y,3x+y}. (a) Suppose Henry's current consumption bundle is (2,1.5), what is his current utility level? If he consumes the bundle (1.5,2), will his utility change from the current utility level?
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter5: Consumer Choice: Individual And Market Demand
Section5.A: Appendix Analyzing Consumer Choice Graphically: Indifference Curve Analysis
Problem 3TY
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Henry's utility function is u(x,y)=max{x+3y,3x+y}.
(a) Suppose Henry's current consumption bundle is (2,1.5), what is his current utility level? If he consumes the bundle (1.5,2), will his utility change from the current utility level?
Transcribed Image Text:(b) On a graph, draw Henry's indifference curve when his utility level is 3.
(c) Now, suppose Henry's consumption bundle is (,). What is his MRS at this bundle? If his
consumption bundle changes to (8,3), what will be his MRS at the new bundle?
(d) Does Henry have convex preferences? Explain.
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