Ambrose has indifference curves with the equation x₂ = constant -4x^1/2₁, where larger constants correspond to higher indifference curves.If good 1 is drawn on the horizontal axis and good 2 on the vertical axis, what is the slope of Ambrose's indifference curve when his consumption bundle is (36, 10)? A)-0.33 B)-16 C)-36/10 D)-10/36 E)-6

Question

Quizplus · Accepted Answer

The slope of the indifference curve is the derivative of x2 with respect to x1. Differentiating x2 = constant - 4x1/2 with respect to x1 gives the slope as -2x1^(-1/2). At x1 = 36, the slope is -2(36)^(-1/2) = -2(6)^(-1) = -1/3 = -0.33.

Ambrose Has Indifference Curves with the Equation X2 = Constant

Ambrose Has Indifference Curves with the Equation X₂ = Constant