Using an indifference curve and budget line analysis

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Twin sisters Rose and Iris each have $100 to spend on flowers (X) and all other goods (Y). Flowers cost $2 each, and all other goods (AOG) have a composite price of $1 each. Assume that their preferences are represented by convex indifference curves. Their grandfather wants to give each girl either 24 flowers or $48 for their birthday. For the analyses below, include a budget line, indifference curve, and optimal choice for each option (flowers gift and cash gift) as well as the initial choice. a. Assume that Iris has preferences such that she is indifferent between the two gifts. Using an indifference curve and budget line analysis, show Iris’ optimal choice before and after the gift. b. Assume that Rose has preferences such that she prefers the cash

Reference no: EM131088811

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Using an indifference curve and budget line analysis : Twin sisters Rose and Iris each have $100 to spend on flowers (X) and all other goods (Y). Flowers cost $2 each, and all other goods (AOG) have a composite price of $1 each. Assume that their preferences are represented by convex indifference curves...

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