Question: 1 an increase in the price of good x and...
1. An increase in the price of good X and an equal percentage
increase in the price of good Y decreases the X-intercept and the
Y-intercept, but does not change the slope of the budget
(a) True (b) False
2. For each of the following scenarios, sketch three
indifference curves for hamburgers and soft drinks. Label your
curves as IC1, IC2, and IC3, where U1 < U2 < U3. Also explain
(a) Joe always likes hamburgers and experiences a constant marginal utility. At first he dislikes soft drinks, but each additional soft drink isn’t as bad as the last. Once he consumes more than 5 soft drinks he starts to like them and then experiences an increasing marginal utility.
(b) Mary likes hamburgers and soft drinks and always gets twice as much satisfaction from an extra hamburger as she does from an extra soft drink.
(c) Bill dislikes hamburgers, but neither likes nor dislikes soft drinks.
(d) Molly likes hamburgers and soft drinks, but always insists on consuming exactly one soft drink for every two hamburgers that she eats.