(a) If your utility is represented by u(x,y) = min(x+2y,2x+y);what do you indifference curves look like?...

(a) If your utility is represented by u(x,y) = min(x+2y,2x+y);what do you indifference curves look like?

(b) Given your answer in (a), obtain the MRS (marginal rates of substitution).

(c) Suppose the prices of x and y are px = $3 and py = $1 and you have 100 dollars. What would you choose?

(d) If px decreases to $1; what would you choose?

(e) Use the Slutsky decomposition to decompose the total price effect into the substitution effect and income effect when px decreases from $3 to $1

Expert Solution

Rahul Sunny answered 8 months ago

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(a) If your utility is represented by u(x,y) = min(x+2y,2x+y);what do you indifference curves look like?...

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