Question 1

Rutvik is an overseas student spending the term in London. While in London he orders meals online (1) and goes to see musicals (2), for which he regularly buys tickets. His utility function is of the form (1, 2 ) = (1 ) + 2, where (1 ) > 0 and (1 ) < 0.

His parents give him a weekly allowance of from which he pays for his food orders and tries to fulfil his dream of watching every West End musical production. Let 1 denote the price of each food delivery and 2 the price of a musical ticket.

(a) What type of preferences does Rutvik have? Are non-satiation and convexity satisfied? Sketch a few of Rutvik's indifference curves in a diagram.