a) Consider a Cobb-Douglas consumer who always spends ? = 25% of his income on good...

a) Consider a Cobb-Douglas consumer who always spends ? = 25% of his income on good x. Write down two bundles (any two you want) that lie on the same indifference curve.

b) Explain to me why two distinct indifference curves can never intersect, unless they are the same curve.

c)In the space below, make up a utility function that is not homogeneous.

d) Suppose the indifference curves of a perfect substitutes agent have a slope of -9/7. Good x is the numéraire. What would ?? need to be in order to create the “degenerate case” (whereby the agent is indifferent between everything on his budget line)?

Expert Solution

Rahul Sunny answered 1 year ago

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