Question #167895
Starting with a given equal endowment of good
X and good Y by individual A and individual B, draw
A’s and B’s indifference curves on the same set of
axes, showing that individual A has a preference for
good X over good Y with respect to individual B.
b. Explain why you drew individual A’s and individual B’s
indifference curves as you did in Problem 3(a).
Expert's answer
Increasing MRS is associated with concave indifference curves. As consumer consumes more of good X , slope of indifference curve gets steeper and steeper.
When both individual have equal initial endowment of good X and good Y . And individual A prefers X over Y then his IC lies more toward X-axis. And individual B , IC lies more tpward Y-Axis.
