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Bill Katz prefers less of good 1 to more and he prefers more of good 2 to less. Bill has strictly convex preferences (i.e. mixtures of bundles are preferred to the bundles themselves). With commodity 1 on the horizontal axis and commodity 2 on the vertical axis answer the following questions: A) Would his indifference curve be positively or negatively slopped? Explain. B) Would the slope of the indifference curve be increasing (convex) or decreasing (concave)? C) Draw his indifference curve in a way that is consistent with your answers in parts (A) and (B) and show with an arrow in which direction the utility increases.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M91720356

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