Answer to Question #242234 in Microeconomics for de girl

Question

Consider a consumer with utility function u(x1, x2) = min{4 min{x1, x2}, x1 + x2} (a) Draw indifference curves passing through points (2, 2), (1, 2) and (4, 2). Make sure you correctly determine kink points. What properties of the preferences can you deduce from the shape of indifference curves? (b) When X = R 2 +, does UMP have a solution when p1 = p2 = 0? What property of the preference relation did you use to get your answer? (c) Assume that prices are such that p1, p2 ≥ 0 and that p` > 0 for some ` ∈ {1, 2} (i.e. the price of at least one good is positive). Derive Walrasian demand. What are the prices for which Walrasian demand is single-valued?

Answer 1

In economics an indifferent curve connects points on a graph representing different quantities of two goods.points between which a consumer is indifferent. That is any combination of two goods indicated by the curve will provide the consumer with equal level of utility .One can also referred to each point on the indifferent curve as rendering the same level of utility for the satisfactions.