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Question 1

The graph below shows indifference curves for product X and Y.

Graphing window shows horizontal axis: 0 to 30, vertical axis: 0 to 30. Start Graph, Color blue
xy
114.62
29.21
37.029
45.802
55
64.428
73.995
83.655
93.379
103.15
112.956
122.789
132.644
142.517
152.404
162.303
172.211
182.129
192.053
201.984
211.921
221.862
231.808
241.757
251.71
261.666
271.624
281.586
291.549
301.514
Start Graph, Color red
xy
229.24
322.314
418.42
515.874
614.057
712.684
811.604
910.728
1010
119.384
128.855
138.395
147.991
157.631
167.31
177.02
186.758
196.519
206.3
216.098
225.912
235.739
245.579
255.429
265.289
275.157
285.034
294.917
304.807
Start Graph, Color green
xy
343.86
436.206
531.201
627.63
724.932
822.808
921.086
1019.656
1118.445
1217.406
1316.501
1415.706
1515
1614.368
1713.799
1813.283
1912.813
2012.382
2111.986
2211.62
2311.281
2410.965
2510.671
2610.395
2710.137
289.894
299.665
309.449
Label "Quantity of product X" at pixel coordinates (175,0).Label "Quantity of product Y" at pixel coordinates (0,170).

Which indifference curve provides the highest level of happiness or satisfaction?

 

Hint


Question 2

Suppose that the consumer is spending all of her income and is consuming at point A.

Graphing window shows horizontal axis: 0 to 20, vertical axis: 0 to 20. Start Graph, Color blue
xy
114.62
29.21
37.029
45.802
55
64.428
73.995
83.655
93.379
103.15
112.956
122.789
132.644
142.517
152.404
162.303
172.211
182.129
192.053
201.984
Start Graph, Color red
xy
014
113
212
311
410
59
68
77
86
95
104
113
122
131
140
15-1
16-2
17-3
18-4
19-5
20-6
Label "Quantity of product X" at pixel coordinates (175,0).Label "Quantity of product Y" at pixel coordinates (0,170).Label "A" at (11,14-11).

What should the consumer do in order to maximize her happiness?

 

Hint


Question 3

If the consumer spends all her income and tries to maximize her utility, which utility curve will she end up on?

Graphing window shows horizontal axis: 0 to 15, vertical axis: 0 to 15. Start Graph, Color blue
xy
15.89
23.71
32.832
42.337
52.014
61.784
71.61
81.472
91.361
101.269
111.191
121.124
131.065
141.014
150.968
Start Graph, Color red
xy
05.6
14.6
23.6
32.6
41.6
50.6
6-0.4
7-1.4
8-2.4
9-3.4
10-4.4
11-5.4
12-6.4
13-7.4
Start Graph, Color green
xy
110.079
26.35
34.846
44
53.447
63.053
72.754
82.52
92.33
102.172
112.038
121.923
131.823
141.735
151.657
Start Graph, Color black
xy
13.175
22
31.526
41.26
51.086
60.961
70.868
80.794
90.734
100.684
110.642
120.606
130.574
140.547
150.522
Label "Quantity of product X" at pixel coordinates (175,0).Label "Quantity of product Y" at pixel coordinates (0,170).

 

Hint