Describing this consumers preferences

Reference no: EM133411919

Assignment:

A consumer describes their preferences in the following manner: "For me, there is no such thing as too much wine or too much cheese. (Note: your professor does not endorse this statement.) However, I always pair 1 glass of wine with 3 slices of cheese. I don't enjoy wine or cheese in any other manner but I also never get sick of pairing wine and cheese like this."

(a) Draw an indifference curve diagram describing this consumer's preferences. Put Wine on the x-axis.

IC1: The indifference curve containing the consumption bundle (2 wine, 8 cheese). Label the point representing this bundle as well.

IC0: An indifference curve containing bundles that are (strictly) less preferred to those on IC1.

Point IC2: An indifference curve containing bundles that are (strictly) more preferred to those on IC1.

(b) With (2, 8), this consumer could afford to give away some commodities and be no worse off. State which commodity and how many units they could give away.

Reference no: EM133411919

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