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  3. 12 choice iii consider a consumer whose preference is represented...

Question: 12 choice iii consider a consumer whose preference is represented...

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1.2 Choice III Consider a consumer whose preference is represented by the utility function where A > 0 and B0. a) What is the consumers marginal rate of substitution? b) If the consumer has income m and faces prices p A and p2 B, what are her optimal bundles? Draw a graph that illustrates this situation, including the budget line and the relevant indifference curve(s) c) If the consumer has income m and faces prices p>A and p2 < B, what are her optimal bundles? Draw a graph that illustrates this situation, including the budget line and the relevant indifference curve(s) d) Suppose that1and p2 1. Do your best to draw a demand curve for good 1. (Focus particularly on where the demand curve intercepts the axes, if it does at all; whether it is linear, concave, or convex; and whether it has any flat regions or not.)

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