Essay
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.
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 vertical axis and coconuts on the horizontal axis. Discuss the shape of the indifference curves and relate them to the MRS.
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