Suppose Michael purchases only two goods, hamburgers (H) and Cokes (C). a) What is the relationship between
Question:
a) What is the relationship between MRSH,C and the marginal utilities MUH and MUC ?
b) Draw a typical indifference curve for the case in which the marginal utilities of both goods are positive and the marginal rate of substitution of hamburgers for Cokes is diminishing. Using your graph, explain the relationship between the indifference curve and the marginal rate of substitution of hamburgers for Cokes.
c) Suppose the marginal rate of substitution of hamburgers for Cokes is constant. In this case, are hamburgers and Cokes perfect substitutes or perfect complements?
d) Suppose that Michael always wants two hamburgers along with every Coke. Draw a typical indifference curve. In this case, are hamburgers and Cokes perfect substitutes or perfect complements?
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a b The indifference curve in this case will be convex toward the origi...View the full answer
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