In: Economics
(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