Georgia always eats hot dogs in a bun together with 1 oz of...

Georgia always eats hot dogs in a bun together with 1 oz. of mustard. Each hot dog eaten in this way provides 15 units of utility, but any other combination of hot dogs, buns, and mustard is worthless to Georgia. a. Explain the nature of Georgia's utility function and indicate the form of her indifference curve map. b. Suppose hot dogs cost $\$ 1,$ buns cost $\$ .40,$ and mustard costs $\$ .10$ per ounce. Show how Georgia's utility can be represented by the total amount of money she spends on these three items. c. How would your answer to part (b) change if the price of hot dogs rose to $\$ 1.50 ?$

Transcript

00:01 Once again, welcome to new problem.

00:04 This time we're dealing with indifference curves in economics.

00:14 And when you think about curves that are indifferent, what you're saying is that if you have x, this is a good x and this is another good y.

00:28 And so you're combining these different goods, x and y.

00:34 And so on this particular graph, regardless of the combinations of goods, you're always going to get the same utility.

00:47 You're always going to get the same utility, u1.

00:50 This is the utility.

00:52 And this simply means that the level of satisfaction, level of satisfaction.

00:59 Satisfaction.

01:01 So let's say, for example, if you consume a coke and fries, there's a certain number of combinations of coax and fries that will give you the same utility at this level.

01:17 If you wanted to increase your utility, then what's going to happen is that you have to move to a different and difference graph.

01:27 So for example, if you want to get the the utility at this point by consuming the same amount of y, then you'd have to push your x to another level moving to a new indifference graph.

01:42 So those are different kinds of utility that you're dealing with.

01:47 Also, you could have a utility where the indifference graphs have constant slopes.

01:57 So the slopes are the same.

01:59 And maybe this could be 20 and this is also 20 this is y this is x in this case the goods the goods x and y are perfect perfect substitutes and when we talk about a substitute it would be something like say maybe i don't know chicken and fish you know instead of having chicken you decide to have fish in state instead of chicken or the other way around.

02:35 So those are perfect substitutes.

02:38 One good can substitute for the other one.

02:40 And then you could also have two goods x and y which are perfect compliments.

02:46 Remember compliments means that one good, compliments means that one good goes with the other.

03:00 For example, you could say something like the left pair of shoes has to go with the right pair of shoes.

03:14 So when that happens, the different combinations have to be compliments.

03:19 You can't have one without the other one.

03:22 So coming back to this problem, we have specific requirements for this particular problem.

03:31 So assume, assume we have hot dogs, you have hot dogs, and we have buns, and we also have mastered.

03:47 So, you know, the mustard is one ounce.

03:51 So we have one hot dog.

03:55 And then we have one bun...

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