Victor Finick Likes to Have the Same Amount of X

question 55

Essay

Victor Finick likes to have the same amount of x as he has of y. His utility function is U(x, y) = min{2x- y, 2y- x}.
a. Draw the indifference curve for Victor that passes through the bundle (0, 0) and the indifference curve that passes through (4, 4). (Hint: Each indifference curve is the intersection of two line segments.)
b. If Victor has a bundle that he likes better than (0, 0) and his consumption of both goods is doubled, is Victor better off?
c. Does Victor always prefer more of either good to less?

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Definitions:

Sensation

The stimulation of sensory receptors and the transmission of sensory information to the central nervous system.

Perception

The process by which individuals interpret sensory information to give meaning to their environment.

Hypothesis

In psychology, a specific statement about behavior or mental processes that is tested through research.

Independent Variable

The variable in an experiment that is manipulated to observe its effect on the dependent variable.