Applying the Constant Vertical Distance Property
A consumer's preferences for weekly hours of leisure (horizontal axis) and weekly income (vertical axis) are represented by a set of indifference curves that are vertical shifts of one another. At 20 hours of leisure per week, the consumer finds that they need an additional $100 in weekly income to move from their current indifference curve (IC1) to a higher one (IC2). If this consumer's leisure time increases to 40 hours per week, how much additional weekly income would they need to make the same move from IC1 to IC2? Explain your reasoning.
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Ch.5 The rules of the game: Who gets what and why - The Economy 2.0 Microeconomics @ CORE Econ
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Constant MRS at a Given Level of Free Time as a Consequence of Vertically Shifted Indifference Curves
Measuring Utility Differences in Grain-Equivalent Terms
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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.
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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?
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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