Answer to Question #315815 in Microeconomics for Corni

Question

Q1.Using the indifference curve approach, with movies on the vertical axis and concerts on the horizontal axis, illustrate a situation where the law of demand is violated. i.e decreases in the price of movies lead to decreases in the quantity demanded of movies.

Q2.With the quantity of popcorn on the vertical axis and ice cream on the horizontal axis, draw indifference maps to illustrate each of the following situations:

I.Leoni's marginal rate of substitution between ice cream and popcorn remains constant, no matter how much ice cream she consumes

II.Heather loves ice cream but hates popcorn

III. When Andy eats ice cream, he tends to get addicted: I.e. the more he has, the more he wants and he is willing to give up more and more popcorn to get the same amount of additional ice cream.

Answer 1

Q1

regardless of the price reduction, there is saturation from the consumption of the goods and the utility from watching movies decreases.

Q2

I

ii

iii