iSI 2012 PEB

[Tania123]

Can someone explain Q3. Will the utility function be concave or convex?

[Tania123]

Also Q5.

[Dr. Strange]

q 3. )
We have 3 cases:
alpha>1 indifference curve is concave so extremes are preferred
alpha =1, perfect substitute , so extremes are preferred'
alpha<1, indifference curve  is convex so means are preferred

[Dr. Strange]

q5 has been discussed here
check link
http://discussion-forum.2150183.n2.nabble.com/isi-2012-ME-II-td7354815i40.html

[urvashi]

but if we simply substitute the budget constrant into the function and maximize alpha gets cancelled out and we aRE LEFT WITH CONVEx PREFERENCES DEMAnD FUNCTIONs why is that happening

[Dr. Strange]

Alpha should not get cancelled out. Could you provide the equation you are getting?

[JMKeynes]

Case 1 - (alpha<1)
             Indifference curves are convex shaped. And since both goods get equal weights and prices are equal, x=y=(M/2p)

Case 2 - (alpha=1)
             Perfect substitutes case. So any combination of x and y satisfying x+y=M

Case 3 - (alpha>1)
             Indifference curves are concave to the origin (if that's the right terminology). And the indifference curve touches the budget line at the x and y axes. So either x=(M/p)  or y=(M/p)

[varnika1880]

HEY guys what answers are you getting for q 10 ?(that restaurant bill ques)

[varnika1880]

Plz help with q10,? Guys

[Dr. Strange]

http://discussion-forum.2150183.n2.nabble.com/ISI-2011-ME-2-td7544224.html

See last entry.

[varnika1880]

Thank u so much @Dr strange