Intermediate Microeconomics · free preview
The Shape Zoo: Substitutes to Bliss Points
Perfect substitutes give constant MRS and straight lines, perfect complements give kinks where MRS is undefined, and bads, neutrals, satiation and discrete goods complete the zoo, each with its own arithmetic and its own lesson for choice.
1. Substitutes with a fixed rate
Substitutes with a fixed rate
2. Complements at fixed proportions
Complements at fixed proportions
3. Bads, neutrals and satiation
Bads, neutrals and satiation
4. Discrete goods and the practice of approximation
Discrete goods and the practice of approximation
5. Constant trade rate
For , what is the MRS at the bundle , and what does it say?
6. The kink's arithmetic
For , where do the indifference curves have their kinks, and what utility does the bundle deliver?
7. Reading upward-sloping curves
An indifference map has upward-sloping curves through the origin region. What does the slope tell you?
8. Past the bliss point
For , what happens to the MRS at bundles with and ?
9. Utility at the bliss point
For , compute the utility at the bundle , and write the number.
10. Substitutes at a bundle
For , compute the utility at the bundle , and write the number.
11. Indifference for linear utility
For u of 2 x1 plus 3 x2, the bundle (5, 4) scores 22. Which bundle is NOT indifferent to it?
12. The tie that buys anything
With u of 2 x1 plus 3 x2 and prices 2 and 3, what does the consumer buy?
13. The slack arm of complements
For u of min of 2 x1 and x2, what utility does the bundle (5, 8) deliver?
14. Beyond bliss
For u of 16 minus (x1 minus 4) squared minus (x2 minus 4) squared, what happens at the bundle (6, 6)?
15. Bliss one degree off
For the bliss utility, compute u at the bundle (2, 4), and write the number.
16. Linear utility at the axis
For u of 2 x1 plus 3 x2, compute the utility at the bundle (0, 7), and write the number.
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