Answer to Question #70285 in Microeconomics for Eric

Question

. Suppose consumer A’s preferences between goods x and y are represented
by the utility function uA(x, y) = min{x + 2y, 2x + y}, while consumer B’s
preferences are represented by the utility function uB(x, y) = min{2x +
4y, 4x + 2y}. Suppose consumers A and B have the same income. Compare
these two consumers’ consumption bundles

Answer 1

We have two functions: uA(x, y) = min{x + 2y, 2x + y} and uB(x, y) = min{2x +
4y, 4x + 2y} and both are complementary, that`s why MRS = 0. If MRS = 0, income
of each consumers A and B is same, then x = 1, y =1