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Consider a model with two goods, apple(X 1 ) and banana(X 2 ). Each good must be considered in a non-negative amount. My preferences over
Consider a model with two goods, apple(X1) and banana(X2). Each good must be considered in a non-negative amount. My preferences over these two goods can be represented by the utility function u=10-X1 -X2.
- 4pts) Sketch a diagram illustrating two of my indifference curves for levels of utility of your choice (please remember to label your axes and to label each indifference curve with its utility level).
- 4pts) Say I have m=50 to spend and that p1=5 and p2=20. What is my optimal choice of consumption bundle and why?
- 4pts) give a different utility function that would represent exactly the same preference as u=10-X1 -X2. Briefly explain your answer.
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