= 2. Assume a consumer has as preference relation represented by u(x1, x2) axı + bx2 with x E C = RX, and a, b > 0. Answ

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2 Assume A Consumer Has As Preference Relation Represented By U X1 X2 Axi Bx2 With X E C Rx And A B 0 Answ 1 (82.2 KiB) Viewed 88 times

= 2. Assume a consumer has as preference relation represented by u(x1, x2) axı + bx2 with x E C = RX, and a, b > 0. Answer the following: = a. Show the preference relation this consumer is convex and strictly monotonic. Show these preferences are not strictly convex for this consumer. b. Graph the indifference curves for this consumer. Now, solve for an explicit expression for the indiffence curve (i.e., x (x1;ū) i constructed in class for an indifference curve with utility level ū.) C. Compute the MRS between good 1 and good 2, and explain why it coincides with the slope of an indifference curve. ,