Home Grades Personalized Reviens Discussion Course Materials Homework Practice A

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Home Grades Personalized Reviens Discussion Course Materials Homework Practice Assignment 2 Graded Assignment Due Saturday 1104 17 at 3 Attempts: Average: /2 11. Indifference curves and preferences lacques likes both sods and milkl. aither good, holding the Assume that the more is beter" principle applies to Jacques; that is. he would always prefer to consume more ion of the other good constant The points on Figure 1 represent combinations of mik and soda that Jacques might choose to consume. Figure 2 shews the same points as Figure some of Jacques's indference curves: I, Iy and ly, These curves show more information about Jacques's preferences than Figun Figure 1 Figure 2 MLK (Glasses) MLK (Glasses) Complete the following table by indicating which bundles Jacques strictly prefers to A given only the information in each figure Information Given By. BC DE FGH Figure 1 Figure 2 Indicate whether each af the following statements is true or false given the graphs True False rigure 1 does not provide enough information tcompare the utiley Jacques receives from a veria F. Figure 2 indicates that Jecques is indifferent among bundles B and F

Explanation / Answer

Figure 1: E

Figure 2: B

Figure 1 is little inconclusive, but bundle E is offering more of soda and milk in comparison to the bundle F. hence, bundle E should be chosen on the basis of more the better property.

Figure is clear and indifference curve is designed. Here, the Bundle B is on indifference curve I3. As per the figure 2, the bundle E cannot be achieved since it is out of the PPF curve if designed. Hence, the best bundle is bundle B.

Statement 1

True

There is not any indifference curve. Hence there is ambiguity in comparison.

Statement 2

False

Point F is on Indifference curve 2 and B is no indifference curve 3. Hence, Jacques is not indifferent between B and F as both the bundles offer different level of utility.

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