Question

CHAPTER 4
ESSAY QUESTIONS

1. Suppose that James and Staniel have each decided to allocated RM1000 per year to an entertainment budget in the form of hockey games or rock concerts. They both like hockey games and rock concerts and will choose to consume positive quantities of both goods. However, they differ substantially in their preference for these two forms of entertainment. James prefer hockey games to rock concerts, while Staniel prefers rock concert to hockey games.
a. Draw a set of indifference curve for James and a second set for Staniel
b. Using the concept of marginal rate of substitution, explain why the two sets of curves different from others.
(6 marks)

3. Explain “Before economic growth, there were too few goods, after growth, there is too little time.

Answer 1

Ques1.

rock classmate Ques, concert sock Concert! Date Page hockey games hockey games ES STANIEL It can be seen from above two graphs, las James prefer flockey games to rock concert, so, he his Indifference curre is steep, as for little more hockey games, he is ready to forego large amount of rock concert. more little more Similary Stanil profers Rock concert more than hockey, his IC is flatter rock concert, he is ready to forego large amount of hockey games Because MRS is called as the slope of Indifference Coss gain AS MRS is higher for James, 15 IC curve is steeper AS MRS is lower for Stanill, his IC curve is flatter relatively curie. MRS = AY AX a Scanned by TapScanner