Sapphira loves shopping. However, she can only buy a set of items following these three preferences: -1 Book and 1 piece of clothing will give her one piece of satisfaction. -3 books (and no items of clothing) will give her one piece of satisfaction. -5 pieces of clothing (and no books) will give her one piece of satisfaction. 1. Draw at least two indifference curves that represent her preferences for Books and Clothing. 2. Are these preferences rational? Well-behaved? Please explain. 3. True, False or Uncertain : If the price of Books goes up, this will increase her consumption of clothing.
Sapphira loves shopping. However, she can only buy a set of items following these three preferences: -1 Book and 1 piece of clothing will give her one piece of satisfaction. -3 books (and no items of clothing) will give her one piece of satisfaction. -5 pieces of clothing (and no books) will give her one piece of satisfaction. 1. Draw at least two indifference curves that represent her preferences for Books and Clothing. 2. Are these preferences rational? Well-behaved? Please explain. 3. True, False or Uncertain : If the price of Books goes up, this will increase her consumption of clothing.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 9SQ
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Sapphira loves shopping. However, she can only buy a set of items following these three preferences: -1 Book and 1 piece of clothing will give her one piece of satisfaction. -3 books (and no items of clothing) will give her one piece of satisfaction. -5 pieces of clothing (and no books) will give her one piece of satisfaction. 1. Draw at least two indifference
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Step 1: Define Indifference Curve
VIEWStep 2: 1. Determine IC Curve that shows the prefernce of the
VIEWStep 3: 2. Determine whether these preferences are rational and well behaved.
VIEWStep 4: 3. Determine true or false that is the price of books goes up the conusumption of clothes goes up
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