dolution

 

Study Exercises

1. Consider Katie’s preferences for magazines and ice cream cones. Several “consumption bundles” are

shown in the table below.

 

a. On a scale diagram with the quantity of ice cream cones on the vertical axis and the quantity of magazines on the horizontal axis, plot and label the various bundles.

 

b. Suppose that Katie is indifferent between bundles c and She is also indifferent between bundles d, g, and h, but all three of these are preferred to c or i. Finally, suppose that, of the bundles shown in the table, bundle e is Katie’s favourite. Draw three indifference curves showing this information.

 

c. Consider bundles e, f, and g. What can you conclude about how Katie would rank these bundles?