x - Rose-Hulman

RHIT / Department of Humanities & Social Sciences / K. Christ
Spring 2010 – 2011 / IA 350, Intermediate Microeconomics / Problem Set 1
8. Adrian's utility function is U(x, y) = (x + 2)(y + 1).
a. Write an equation, y = f(x), for Adrian's indifference curve that goes through the point (x, y) = 2, 8).
_________________________________. On the diagram below, sketch Adrian's indifference curve for U = 36.
b. Suppose that the price of each good is 1 and that Adrian has an income of 11. Write out an expression for the
budget constraint: ___________________________. Based on this information, add an appropriate budget
line to the diagram. Can Adrian achieve U = 36 with this budget? ___________.
c. Write out a mathematical expression for Adrian's marginal rate of substitution in terms of x and y:
_____________________. (Remember,
MRS
MU
x
.)
MU
y
d. Using this information, what is Adrian's optimal consumption bundle? x = _____; y = ______.
16
y
12
8
4
0 4 8 12 16
x