3. Indifference curves and preferences Aa Aa Sam likes both chocolate and ice cr

Question

3. Indifference curves and preferences Aa Aa Sam likes both chocolate and ice cream. Assume that the "more is better" principle applies to Sam; that is, he would always prefer to consume more of either good, holding the consumption of the other good constant. (Using the terminology of preferences, this means you assume that his preferences are monotonic.) The points on the following diagram represent combinations of ice cream and chocolate that Sam might choose to consume. CHOCOLATE (Bars per weekl ICE CREAM (Cones per weekl Given only the information on the preceding diagram, you can be sure that Sam strictly prefers to bundle D and that he strictly prefers bundle D to bundles G and B bundles F, A, and E bundles G and E bundle C bundles C and E ion on the preceding diagram, what can you say about how Sam ranks bundles B and E

Explanation / Answer

1) Bundle C because it gives more of both goods to Sam as compared to bundle D.

2) Bundle H because it gives less of both goods to Sam as compared to bundle D.

3) There is not enough information to compare the utility he receives from E versus B.

4) Bundle C and E

This is because these bundles lie above the IC of bundle D.

5) Bundle H, G and B

These bundles lies below the IC of bundle D so they provide less utility.

6) Bundles F and A

All these bundles lie on the same IC so provide same satisfaction.

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.