Microeconomics: Theory and Applications with Calculus, 4e

Chapter 3

1. 1.5 If the neutral product is on the vertical axis, the indifference curves are parallel vertical lines.

2. 2.2 Sofia’s indifference curves are right angles (as in panel b of Figure 3.5 ). Her utility function is $U=\text{min}(H,W),$[&U|=|~rom~min~normal~(H, W),~norm~&] where min means the minimum of the two arguments, H is the number of units of hot dogs, and W is the number of units of whipped cream.

3. 2.4 If we apply the transformation function $F(x)=x^{\rho }$[&F(x)|=|x^{|rho|}&] to the original utility function, the new utility function $V(q_1,q_2)=F(U(q_1,q_2))={[{(q_1^{\rho }+q_2^{\rho })}^{1/\rho }]}^{\rho }=q_1^{\rho }+q_2^{\rho },$[&V(q_{1}, q_{2})|=|F(U(q_{1}, q_{2}))|=|[(q_{1}^{|rho|}|+|q_{2}^{|rho|})^{1/|rho|}]^{|rho|}&][&|=|q_{1}^{|rho|}|+|q_{2}^{|rho|},&] which has the same preference properties ...