Suppose that you hate typing and hate filing.
1. Draw a graph with “hours of typing” on the horizontal axis and “hours of filing” on the vertical. Do your indifference curves slope upward or downward? Why?
2. Suppose you currently type for 3 hours a day and file for 5, but you’d be just as happy typing for 2 hours a day and filing for 7. What is the slope of your indifference curve at the point (3, 5)? If you hated typing even more than you do, would you expect the indifference curve to be steeper or shallower?
3. Would you expect the indifference curve to be steeper or shallower at points that represent a lot of typing and very little filing? What does this say about the shape of the indifference curves?
4. Suppose your boss tells you that henceforth, you may divide your 8-hour day any way you wish between these two activities, but the number of hours you spend typing and the number of hours you spend filing must add up to 8. Draw the relevant budget constraint.
5. Given the information in part b, will you now choose to type more or less than 3 hours a day? Illustrate your new optimum and explain why it is your optimum.