Question #70285

. 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

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

Expert's answer

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

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

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