Check Your Understanding

1. Question

   The accompanying table shows Samantha’s preferences for consumption bundles composed of chocolate kisses and licorice drops.

   Consumption bundle	Quantity of chocolate kisses	Quantity of licorice drops	Total utility (utils)
   A	1	3	6
   B	2	3	10
   C	3	1	6
   D	2	1	4

   1. With chocolate kisses on the horizontal axis and licorice drops on the vertical axis, draw hypothetical indifference curves for Samantha and locate the bundles on the curves. Assume that both items are ordinary goods.

   2. Suppose you don’t know the number of utils provided by each bundle. Assuming that more is better, predict Samantha’s ranking of each of the four bundles to the extent possible. Explain your answer.

2. Question

   On the left diagram in panel (a) of Figure D.4, draw a point B anywhere on the 200-util indifference curve and a point C anywhere on the 100-util indifference curve (but not at the same location as point A). By comparing the utils generated by bundles A and B and those generated by bundles A and C, explain why indifference curves cannot cross.

3. Question

   Lucinda and Kyle each consume 3 comic books and 6 video games. Lucinda’s marginal rate of substitution of books for games is 2 and Kyle’s is 5.

   1. For each person, find another consumption bundle that yields the same total utility as the current bundle. Who is less willing to trade games for books? In a diagram with books on the horizontal axis and games on the vertical axis, how would this be reflected in differences in the slopes of their indifference curves at their current consumption bundles?

   2. Find the relative price of books in terms of games at which Lucinda’s current bundle is optimal. Is Kyle’s bundle optimal given this relative price? If not, how should Kyle rearrange his consumption?

   We provide these review questions in addition to discussion starters in case you or the AP^® program chooses a rigorous approach to this material.