CHAPTER 6 APPENDIX
1A.1 The graph to the left violates “more is better” because the indifference curve has a positive slope.
1A.2 I/Px1 = 100 and I = 100, thus Px1 = $1.00
1A.3 Disagree. Since MUx / MUy = 12 <Px / Py = 39 / 3 = 13. MUx / Px = MUy / Py <MUy / Py.
1A.4 (a) We know that
100 5 10 100.
A N
P A P N N A+ = ® + =
We also know that
/ / / 5/ 10 2 .
N A N A
MU MU A N P P N A= = = ® =
Substituting, we find that
5 2 10 100 5A A A
;
10.N=
(b) If
P
N
10
,
N5
; and if
P
N
2
,
25.N
(c) Answers will vary, but the graph should show an indifference curve tangent to a budget
constraint drawn for
P
A
$10
and
P
N
= to one of the prices given in the answer to (b).
X1 X2X3
Demand
Units of X
Price per unit of X
P1x
P2x
P3x
0
1A.5 Carmen will purchase 6 California rolls and 10 eel sashimi. This combination maximizes total
1A.6 When the price of product X falls, the budget constraints swing to the right. Each tangency point