Question

draw a diagram containing three indifference curves. Also write a short (1-2 sentence) explanation of why you have drawn each indifference curve this way.

Sam spends her free time in two ways: petting her cat or watching the Gilmore Girls. She gets the same amount of utility from spending an hour doing either activity. Be sure to label and number the axes on your diagram. Place hours petting her cat on the horizontal axis and hours watching Gilmore Girls on the vertical axis.

Answer 1

Utility function: U = C + G where C: Hours of petting cat and G: Hours of watching Gilmore Girls

In this case, C and G are perfect substitutes and indifference curves are linear straight lines touching both axes.

In following graph, I0, I1 and I2 are indifference curves, with I0 having lowest utility and I2 having highest utility.

12 C