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Draw the indifference curves that correspond

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Consider the following utility functions and utility levels:

  1. U(x,y) = 2x + y, U = 8 U = 10
  2. U(x,y)= (x2y), U = 18 U = 36
  3. U(x,y) = min(2x,y) U = 2 U = 4

a. Draw the indifference curves that correspond to the two utility levels indicated for each utility function. (I only need help with 3)

b. Define the MRSYx . For each of the three utility functions, find the MRSYx. Note that MUx=2 and MUy=1 when U(x,y) = 2x + y; MUx =2xy and MUy= x2when U(x,y) = x2y.

Is the MRS a function? If it is, what is it a function of?

c. Suppose UA(x,y) = 2x+y and A currently has consumption bundle (4,4). Suppose that UB(x,y) = x2y and has consumption bundle (2,4). What is the maximum B is willing to give up for more X? Why? What is the minimum A is willing to accept to give up y? Why? Could they make a voluntary trade and what is the range of the terms of trade would be?

Reference no: EM132471489

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