Analyzing a Farmer's Preferences
An agricultural economist is studying a farmer's preferences for two goods: hours of free time per day (plotted on the horizontal axis) and bushels of grain consumed per day (plotted on the vertical axis). The economist observes the following two facts:
- When the farmer has 16 hours of free time, they consider a bundle of (16 hours, 50 bushels) to be equally as good as a bundle of (15 hours, 55 bushels).
- When the farmer has 16 hours of free time, they consider a bundle of (16 hours, 70 bushels) to be equally as good as a bundle of (15 hours, 75 bushels).
Based only on these two observations, what can you infer about the shape of this farmer's indifference curves? Explain your reasoning.
0
1
Tags
Social Science
Empirical Science
Science
Economy
Economics
CORE Econ
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.5 The rules of the game: Who gets what and why - The Economy 2.0 Microeconomics @ CORE Econ
Analysis in Bloom's Taxonomy
Cognitive Psychology
Psychology
Related
Constant MRS at a Given Level of Free Time as a Consequence of Vertically Shifted Indifference Curves
Measuring Utility Differences in Grain-Equivalent Terms
Analyzing Preferences from a Utility Function
A consumer's preferences for two goods, free time (horizontal axis) and grain (vertical axis), are represented by indifference curves that are vertical shifts of one another. At 15 hours of free time, the consumer requires an additional 5 bushels of grain to move from indifference curve IC1 to a higher curve IC2. Based on this specific property of the preferences, what can be concluded?
Consider a consumer whose preferences for good X (horizontal axis) and good Y (vertical axis) are represented by indifference curves that are vertical shifts of one another. If this consumer needs 10 extra units of good Y to move from indifference curve A to indifference curve B when they have 5 units of good X, then they will need more than 10 units of good Y to make the same move from curve A to curve B when they have 20 units of good X.
Consider a consumer whose preferences for good X (horizontal axis) and good Y (vertical axis) are represented by indifference curves that are vertical shifts of one another. If this consumer needs 10 extra units of good Y to move from indifference curve A to indifference curve B when they have 5 units of good X, then they will need more than 10 units of good Y to make the same move from curve A to curve B when they have 20 units of good X.
Analyzing Consumer Preference Data
Calculating Utility Equivalence with Specific Preferences
An economist studying a consumer's preferences for leisure (horizontal axis) and consumption goods (vertical axis) finds that the consumer's marginal rate of substitution (the amount of consumption goods they are willing to give up for one more hour of leisure) depends only on the amount of leisure they have. It does not change if their quantity of consumption goods changes, holding leisure constant. What must be true about this consumer's indifference curves?
Analyzing a Farmer's Preferences
A consumer's preferences for a good on the horizontal axis and a good on the vertical axis can be described in different ways. Match each description of a preference property with its correct implication.
Applying the Constant Vertical Distance Property
Figure 5.3b: Constant MRS at a Given Level of Free Time