doubt from workouts
Posted by riyaf on Mar 17, 2014; 4:02pm
URL: http://discussion-forum.276.s1.nabble.com/doubt-from-workouts-tp7585282.html
6.13 (1) Here is a puzzle for you. At fi rst glance, it would appear that
there is not nearly enough information to answer this question. But when
you graph the indi fference curve and think about it a little, you will see
that there is a neat, easily calculated solution.80 DEMAND (Ch. 6)
Kinko spends all his money on whips and leather jackets. Kinko's
utility function is U(x; y) = min(4x;2x+y), where x is his consumption
of whips and y is his consumption of leather jackets. Kinko is consuming
15 whips and 10 leather jackets. The price of whips is $10. You are to
nd Kinko's income.
(a) Graph the indi fference curve for Kinko that passes through the point
(15;10). What is the slope of this indi fference curve at (15;10)?
What must be the price of leather jackets if Kinko chooses this point?
Now, what is Kinko's income?
answers : slope of IC= -2
price of leather jackets=$5
income =$200
Also, please explain the shape of the IC. Why isn't L-shaped ?