2. Suppose that you are perfectly indifferent between a cup of coffee (e) and a cup of tea (t). (a) Graph three indifference curves for your preferences. Coffee (b) Write a utility function for your preferences.

2. Suppose that you are perfectly indifferent between a cup of coffee (e) and a cup of tea (t). (a) Graph three indifference curves for your preferences. Coffee (b) Write a utility function for your preferences.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 2QFR

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Concept explainers

Marginal Rate of Technical Substitution

MRTS reaches a manufacturer when a part of the product is lowered to sustain the manufacturing level when the other part is extended. It is the level of the quantity that is lowered when one extra volume is used, and the output is unchanged.

Preferences and Utility Analysis

Before understanding what is preference and utility analysis, it is very important to understand the terms preference and utility separately.

Question

2. Suppose that you are perfectly indifferent between a cup of coffee (c) and a cup of tea (t).
(a) Graph three indifference curves for your preferences.
Coffee
(b) Write a utility function for your preferences.

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Step 1: Defining indifference curve

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Step 2: Deriving utility function

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Step 3: Drawing indifference curves

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