The picture below depicts a Asaf\'s indifference curves between Almond Milk and

Question

The picture below depicts a Asaf's indifference curves between Almond Milk and Cookies. Each curve is associated with a number of utiles as labeled 1,2 and 3. 6) If Asaf has 5 cookies and a glass of almond milk, how many glasses of milk would Asaf demand to give up a single cookie and remain at the same level of happiness (rounded to the nearest glass)? V a. b. Now say Asaf has 1 cookie and 5 glasses of almond milk. If he can barter almond milk for cookies at a rate of 3 to 1, can Asaf be made better off? What utility level can Asaf obtain assuming trades can only be made in whole units? 5 4 0 0 6 Cookies

Explanation / Answer

1.

From the graph it is clear that he would demand 2 glasses of milk for 1 cookie

2.

Yes he can become better off by giving 3 glasses of milk and taking 1 cooke this will take him to utility curve 2

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