Exam 2: Preferences

Recall that Tommy Twit's mother measures the departure of any bundle from her favorite bundle for Tommy by the sum of the absolute values of the differences. Her favorite bundle for Tommy is (2, 7), that is, 2 cookies and 7 glasses of milk. Tommy's mother's indifference curve that passes through the point (c, m) = (4, 5) also passes through

A consumer who is unable to detect small differences in the amount of water in her beer could have a transitive strict preference relation but is unlikely to have a transitive indifference relation.

Charlie's indifference curves have the equation , where larger constants denote better indifference curves. Charlie strictly prefers the bundle (6, 16) to

Toby Talkalot subscribes to a local phone service that charges a fixed fee of $10 per month and allows him to place as many local phone calls as he likes without further charge. Let good 1 be an aggregate of commodities other than local phone use and let good 2 be local phone use. (Measure good 1 on the horizontal axis and good 2 on the vertical axis.) On Monday, Toby didn't use the telephone at all. The slope m of his indifference curve at the consumption bundle he chose on Monday was

Ambrose has an indifference curve with equation x₂ = 20 - 4x ₁. When Ambrose is consuming the bundle (4, 16), his marginal rate of substitution is .

Bill Katz prefers more of good 1 to less and he prefers less of good 2 to more. Bill has convex preferences. If we draw his indifference curves with good 1 on the horizontal axis and good 2 on the vertical axis, then his indifference curves have positive slope but get steeper as they rise.

If someone has the utility function U = 1,000 + 2 min {x, y}, then x and y are perfect complements for that person.

If good X is measured on the horizontal axis and good Y on the vertical, what can you say about the preferences of someone whose indifference curves are a. parallel to the Y axis? b. positively sloped with more desirable indifference curves as one moves to the right? c. negatively sloped with more desirable indifference curves as one moves to the left?

Charlie's indifference curves have the equation where larger constants denote better indifference curves. Charlie strictly prefers the bundle (10, 17) to