Vlad loves vases with orchids. More precisely, he loves vases with three orchids in each. When his vases have less than three orchids each, every time he receives an orchid his utility goes up by 1, while it does not change if he receives a vase. When his vases have more than three orchids each, every time he receives a vase his utility goes up by 3,¹ while it does not change if he receives an orchid. a) Draw the indifference curves of Vlad (2 are enough) b) Write Vlad's utility function. c) Suppose now that Vlad has a fixed budget for vases and orchids and tha a tax on orchids is imposed. Will Vlad buy more vases, less vases, or the same as before?

Vlad loves vases with orchids. More precisely, he loves vases with three orchids in each. When his vases have less than three orchids each, every time he receives an orchid his utility goes up by 1, while it does not change if he receives a vase. When his vases have more than three orchids each, every time he receives a vase his utility goes up by 3,¹ while it does not change if he receives an orchid. a) Draw the indifference curves of Vlad (2 are enough) b) Write Vlad's utility function. c) Suppose now that Vlad has a fixed budget for vases and orchids and tha a tax on orchids is imposed. Will Vlad buy more vases, less vases, or the same as before?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.1P

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