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Problem 1:
a) If there are only two goods, it is possible to illustrate a consumer's preferences over them with an indifference map. Draw an indifference map with three indifference curves.
b) There are a few standard assumptions about what an indifference map can and cannot look like. Which are this assumption, and what reasoning lies behind them?
Problem 2:
a) Often, we assume that consumers have diminishing MRS. Explain what that means and how it is reflected in indifference curves.
b) Can you draw an indifference curve that does not have diminishing MRS, but that is still allowed?
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