For both of the following utility functions, draw the indifference curves for the indicated utility levels, including at least three consumption bundles on each. Be precise. (And don’t expect the indifference curves to necessarily look like those in class.)
a. i) u(x,y) = xy ( MUx=y, MUy=x ) for 16 utils and 25 utils ii) u(x,y) = 6x+2y ( MUx=6, MUy=2 ) for 30 utils and 60 utils
Suppose Ann and Bob each have $90 with which to buy xanthum (x) and yarrow (y). Their preferences are represented, respectively, by the utility functions (i) and (ii) in problem 5.a. Assuming the price of x is $12 and the price of y is $2, draw their common budget set. Next, determine each agent’s demands for x and y.