lOMoAR cPSD| 48011787
Downloaded by Vincent kyalo ()
, lOMoAR cPSD| 48011787
DETAILED
QUESTIONS AND
ANSWERS COMBILED
BY MASTERVINCENT.
ALL THE BEST
SUCCESS.
Downloaded by Vincent kyalo ()
, lOMoAR cPSD| 48011787
SUGGESTED SOLUTIONS FOR MAY/JUNE 2024
QUESTION 1
1a. Consider the following baskets of goods:
FOOD CLOTHING
A 8 3
B 6 6
C 3 8
If preferences satisfy all requirements, is A preferred to
C or C to A? Explain your answer.
Basket A has more food than basket C.
Basket C has more clothing than basket A.
Therefore, basket A and C cannot be compared
without additional information.
1b. An island economy produces only two goods –
coconuts and pineapples. There are five
people (A, B, C, D and E) living on the island, with
these preferences:
A has a strong
preference for pineapples.
B has a strong preference
for coconuts.
Downloaded by Vincent kyalo ()
, lOMoAR cPSD| 48011787
C doesn’t care for pineapples
(assigns no value to them). D
doesn’t care for coconuts (assigns
no value to them).
E will only consume pineapples and coconuts in the
fixed proportion of one pineapple to one coconut.
For each of these five individuals, construct a
representative indifference curve with
pineapples on the horizontal axis and coconuts
on the vertical axis.
Person A:
Coconuts
A
Pineapples
Person B:
Downloaded by Vincent kyalo ()
Downloaded by Vincent kyalo ()
, lOMoAR cPSD| 48011787
DETAILED
QUESTIONS AND
ANSWERS COMBILED
BY MASTERVINCENT.
ALL THE BEST
SUCCESS.
Downloaded by Vincent kyalo ()
, lOMoAR cPSD| 48011787
SUGGESTED SOLUTIONS FOR MAY/JUNE 2024
QUESTION 1
1a. Consider the following baskets of goods:
FOOD CLOTHING
A 8 3
B 6 6
C 3 8
If preferences satisfy all requirements, is A preferred to
C or C to A? Explain your answer.
Basket A has more food than basket C.
Basket C has more clothing than basket A.
Therefore, basket A and C cannot be compared
without additional information.
1b. An island economy produces only two goods –
coconuts and pineapples. There are five
people (A, B, C, D and E) living on the island, with
these preferences:
A has a strong
preference for pineapples.
B has a strong preference
for coconuts.
Downloaded by Vincent kyalo ()
, lOMoAR cPSD| 48011787
C doesn’t care for pineapples
(assigns no value to them). D
doesn’t care for coconuts (assigns
no value to them).
E will only consume pineapples and coconuts in the
fixed proportion of one pineapple to one coconut.
For each of these five individuals, construct a
representative indifference curve with
pineapples on the horizontal axis and coconuts
on the vertical axis.
Person A:
Coconuts
A
Pineapples
Person B:
Downloaded by Vincent kyalo ()
