5.13 Price indifference curves Price indifference curves are iso-utility curves with the prices of two goods on

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5.13 Price indifference curves Price indifference curves are iso-utility curves with the prices of two goods on the X- and Y-axes, respectively.

Thus, they have the following general form:

(

p1, p2)∣v

(p1, p2, I) = v0.

Derive the formula for the price indifference curves for the Cobb–Douglas case with

α =β=0.5. Sketch one of them.

What does the slope of the curve show?

What is the direction of increasing utility in your graph?

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