Question
There are two goods available: cricket balls (x1) and tennis rackets (x2). Jatt's ranking of various combinations of these goods is described by the utility
There are two goods available: cricket balls (x1) and tennis rackets (x2). Jatt's ranking of various combinations of these goods is described by the utility function u(x1, x2) = 2x1 + x2. a) Can you plot three indifference curves for Jatt corresponding to utility values u = 2, u = 4, and u = 6? Ensure you distinctly illustrate which curve corresponds to each utility level and label any points where the curves intercept the axes. b) In this context, how would you define Jatt's rate at which he's willing to trade one good for the other? In layman's terms, can you clarify the significance of this rate for Jatt? Also, explain its connection to the additional satisfaction he gets from each good. c) Among the following utility functions, which, if any, can also portray Jatt's ranking of the goods? u1 = x1 + x2; u2 = 2x1 x2; u3 = 2x1x2. Kindly specify which function(s); give explaination. If none do, please explain why.
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