Question

Draw two indifference curves for each of the following cases, with fish on the horizontal axis and meat on the vertical axis. Label the two indifference curves U₁ and U₂, where U₂ represents the greatest utility. In each case, what, if anything, you can say about the consumer’s MRS?

a.   John likes eating both fish and meat, but he likes a

dditional amounts of either less after several servings.

b.   Reyna likes eating meat but she can take or leave fish: eating fish doesn’t affect her satisfaction one way or the other.

c.   Dan dislikes eating fish but likes meat.

Answer 1

a. As John likes eating both fish and meat, hence the utility derived from both fish (F) and meat(M) is positive. However, he likes additional amounts of either less after several servings, thus the increment in total utility by consuming either fish or meat is negative, thus the marginal utilities of both fish and meat I.e. MU_F and MU_M are negative, and hence the slope of the indifference curve I.e the marginal rate of substitution(MRS) = MU_F/ MU_M is positive and the indifference curve is convex to the origin and higher indifference curve implies higher utility levels, I.e U1 represent higher utility than U2.