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Perfect Substitutes: Suppose that a consumer has perfect substitutes preferences over bundles of non-negative amounts of each of two commodities. The consumer's preferences can be
Perfect Substitutes: Suppose that a consumer has perfect substitutes preferences over bundles of non-negative amounts of each of two commodities. The consumer's preferences can be represented by a utility function of the form U(x1, x2) = x1 + x2. 1. Illustrate a representative indifference curve for the consumer. 2. Indicate the direction of increasing utility for the consumer. 3. Are these preferences strictly convex? Explain why. 4. Are these preferences convex? Explain why.
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