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Q: indifference curve
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Q: discuss the three assumptions of indifference curves.
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Q: Why indifference curves never intersect. Prove graphically?
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Q: What are indifference curves?
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Q: In case of the complementary goods what is the shape of the indifference curve ??
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Q: How to explain indifference curve and also describe the properties of indifference curve?
A:
Q: Explain graphically how indifference analysis can be used to derive a demand curve.
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Q: Which are the three main assumptions of indifference curves? Please do the comparison with each…
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Q: Q-: Define indifference curve and elaborate different varieties/types of indifference curve
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Q: MRS is constant along a linear indifference curve
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Q: Define Optimization in an indifference curve along with relevant examples?
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- How do we measure utility? Are interpersonal (i.e. between people) comparisons valid? Why or why not?We claimed in the text that if preferences were monotonic, then a diagonal line through the origin would intersect each indifference curve exactlyonce. Can you prove this rigorously? (Hint: what would happen if itintersected some indifference curve twice?)The primary goal of very consumer is to maximize satisfaction. Explain, how a consumer achievesequilibrium using:a) Indifference curve analysisb) Marginal Utility theory
- what is satiation point? And how it is helpful in deriving indifference curve?i. Write down the Lagrangian form and solve the utility maximization problem. ii. Assume that the income increases from 100 to $101. What is the increase in the optimal value of u(x,y)?Eren’s two main hobbies are taking vacations overseas (V) and eating expensive meals (M). His utility function is given as: U(V,M) = V^2MLast year, the average price of taking a vacation overseas was US$200 and the average price of an expensive meal is $50. However, due to supply problems in Onions, the average price of an expensive meal rose to $75. The average price of a vacation did not change. His income, which is $1500, did not change. Suppose that the Department of Welfare wants to know how much should be given to Eren to offset his change un utility due to the price increase of an expensive meal. Calculate the compensative variation (CV).
- Your friend tells you that although she has a largeamount of M&Ms and just a few Skittles, she wouldstill be willing to give up the rest of her Skittles, just toget one last M&M. What characteristic of indifferencecurves is your friend going against?We claimed in the text that if preferences were monotonic, then a diag-onal line through the origin would intersect each indifference curve exactly once. Can you prove this rigorously? (Hint: what would happen if itintersected some indifference curve twice?)In case of the complementary goods what is the shape of the indifference curve ??
- Sanjay won a poker game against his friends. Now he has to choose between $600 (the winnings) and the chance to play a new game. In this new game, Sanjay has a 50% chance of winning nothing and a 50% chance of winning $1000. The following graph presents the utility function of Sanjay with respect to money: 1. By how much money would his winnings need to increase or decrease so that Sanjay isindifferent between the $600 and the new game? At a different table, Juan wins $800 in a blackjack game. Similarly, he has to choose between $800 or the chance to win a new game. In this game, Juan has a 45% chance of winning nothing and a 55% chance of winning $1000. The following graph presents the utility function of Juan with respect to money: 2. By how much money would his winnings need to increase or decrease so that Juan is indifferent between the $800 and the new game? Please enter a positive number for an increase or a negative number for a decrease.b) Define indifference curve and discuss the characteristics of an indifferencecurve.No written by hand solution Assume Fred has the following preference relation on [0, 1]: x ≿ y if and only if x ≤ y for all x ̸= 1 and y ̸= 1; and 1 ≻ z for all z ∈ (0, 1), 1 ∼ 1 and 0 ≻ 1. Does there exists a utility representation for this preference relation? If yes, provide a utility function. If no, explain. Show your work.
