5.2 Consider your tastes for €5 notes and €10 notes.

A. Suppose that all you care about is how much money you have, but you don’t care whether a particular amount comes in more or fewer notes and suppose that you could have partial €10 and €5 notes.

a. With the number of €5 notes on the horizontal axis and the number of €10 notes on the vertical, illustrate three indifference curves from your indifference map.

b. What is your marginal rate of substitution of €10 notes for €5 notes?

c. What is the marginal rate of substitution of €5 notes for €10 notes?

d. Are averages strictly better than extremes? How does this relate to whether your tastes exhibit diminishing marginal rates of substitution?

e. Are these tastes homothetic? Are they quasilinear?

f. Are either of the goods on your axes essential?