# Quiz 2: A Theory of Preferences

Business

Q 1Q 1

In economics, consumption bundles are:
A)utility functions.
B)bags used by retail merchants.
C)preference orderings.
D)combinations of goods and services.

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Multiple Choice

D

Q 2Q 2

Benoit's preferences are given by the utility function U(x,y)= 10x + 5y. He consumes 10 units of good x and 9 units of good y. If he consumes only one unit of x, how many units of y must he consume in order to be as well off as before?
A)10
B)27
C)18
D)30

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Multiple Choice

B

Q 3Q 3

Smoking can lead to lung cancer and premature death. Which of the following would an economist use to explain why people smoke?
A)Smokers exhibit irrational behaviour.
B)Smokers face tradeoffs.
C)Since smoking is addictive, smokers need to smoke.
D)Smokers are not maximizers.

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Multiple Choice

B

Q 4Q 4

Which of the following preference orderings violates the transitivity assumption?
A)Bananas are indifferent to Oranges, Bananas are preferred to Apples, Apples are preferred to Bananas.
B)Apples are preferred to Oranges, Oranges are preferred to Bananas, Apples are preferred to Bananas.
C)Oranges are indifferent to Bananas, Bananas are indifferent to Apples, Apples are indifferent to Oranges.
D)Bananas are preferred to Apples, Apples are indifferent to Oranges, Bananas are preferred to Oranges.

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Multiple Choice

Q 5Q 5

If an indifference curve is smooth and convex to the origin, then:
A)the two goods are said to be concave combinations of each other.
B)there is a diminishing marginal rate of substitution.
C)the two goods are said to be convex combinations of each other.
D)the indifference curve is said to be normal.

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Multiple Choice

Q 6Q 6

Economists assume that an individual's preference orderings include all of the following except:
A)transitivity.
B)preference or indifference.
C)homogeneity.
D)completeness.

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Multiple Choice

Q 7Q 7

The fact that I'm willing to eat tater tots when french fries are not available illustrates:
A)diminishing MV.
B)maximization.
C)substitution.
D)inconsistency.

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Multiple Choice

Q 8Q 8

Employees demand more more for overtime work because:
A)they are greedy.
B)longer hours are tiresome.
C)only the hardworking ones self- select for extra hours.
D)working extra hours makes them less willing to trade off leisure for income.

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Multiple Choice

Q 9Q 9

If we consider the bundles A = (5,30)and B = (6,40), then:
A)the consumer is indifferent between A and B.
B)A is preferred to B.
C)utility at point A is lower than the utility at point B.
D)B is preferred to A.

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Multiple Choice

Q 10Q 10

Which of the following is consistent with the transitivity assumption?
A)If A>B and A>C then B>C.
B)If A

**A C)If A>B and A>C then B=C. D)If A>B and A=C then B**Free

Multiple Choice

Q 11Q 11

A vegetarian's indifferent curve in a space defined by hamburgers on the horizontal axis and broccoli on the vertical axis:
A)is concave to the origin.
B)is horizontal.
C)is vertical.
D)cannot be defined.

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Multiple Choice

Q 12Q 12

Which of the following is not a reason that economists use the assumption that indifference curves are convex?
A)It directs attention to the relevant part of the curve.
B)It is measurable.
C)It is convenient.
D)It is reasonable.

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Multiple Choice

Q 13Q 13

Jane's utility function is U(x,y)= 2xy. She has 2 units of good x and 4 units of good y. Tim's utility function is U(x,y)= 5x + 2y. He has 4 units of good x and 1 unit of good y. We can conclude that:
A)each prefers their own bundle to the other's bundle.
B)Jane prefers Tim's bundle to her own, but Tim prefers his own bundle to Jane's.
C)each prefers the other's bundle to their own.
D)Tim prefers Jane's bundle to his own, but Jane prefers her own bundle to Tim's.

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Multiple Choice

Q 14Q 14

Which of the following assumptions is not generally applied to an indifference curve?
A)transitive
B)smooth
C)convex
D)diminishing MRS

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Multiple Choice

Q 15Q 15

If the marginal rate of substitution is a constant (5, for example), then indifference curves are not:
A)smooth.
B)straight lines.
C)downward sloping.
D)kinked.

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Multiple Choice

Q 16Q 16

People driving on a four- lane expressway during the rush hour tend to distribute their vehicles fairly evenly among the four lanes because:
A)their tastes and preferences differ.
B)the law of large numbers is operating.
C)they all tend to be maximizers.
D)they choose lanes on a random basis.

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Multiple Choice

Q 17Q 17

Overtime pay is higher than regular pay because:
A)foregone leisure hours in addition to the ones for regular work are valued lower.
B)employers want to insure quality work after hours.
C)labour unions have the upper hand in the Canadian economy.
D)foregone leisure hours in addition to the ones for regular work are valued higher.

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Multiple Choice

Q 18Q 18

Carl has the utility function U(x,y)= 2xy. His indifference curve passing through the bundle (4,3)must also pass through the point where x is equal to 6 and y is equal to:
A)12.
B)24.
C)2.
D)10.

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Multiple Choice

Q 19Q 19

Assume that when you get home today, there is a letter in your mailbox from Joe Granburg, the stock market wizard. He has the latest expert advice for you about purchasing stocks. You should:
A)immediately phone your broker and follow his advice.
B)wonder why Joe didn't follow his own advice rather than sell the information.
C)only follow his advice if it details accurate past trends in stock prices.
D)only follow his advice if he has good information about the future income streams of those companies whose stock he recommends you purchase.

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Multiple Choice

Q 20Q 20

Nonsatiation implies that consumption bundles:
A)which are nearer the origin are preferred.
B)which contain more of all goods are preferred.
C)which contain fewer of all goods are preferred.
D)which contain more of one good and less of another are preferred.

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Multiple Choice

Q 21Q 21

Given the utility function U(x,y)= x

^{2}^{ }+ y, which of the following preference statements is true? A)(2,3)is preferred to (3,2) B)(2,1)is indifferent to (1,4) C)(2,1)is indifferent to (1,3) D)(2,1)is preferred to (1,2)Free

Multiple Choice

Q 22Q 22

Traffic in the city moves along as well as it does (i.e., few accidents, reasonable speed)because:
A)drivers are usually concentrating intently on their own welfare.
B)people take others' goals and interests into account.
C)insurance does not cover all the costs of an accident.
D)almost all drivers have the same attitude regarding safety and speed.

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Multiple Choice

Q 23Q 23

If the utility number associated with consumption bundle a is exactly the square root of the utility number associated with bundle b, then:
A)bundle b offers as much utility as two of bundle a.
B)bundle a is preferred to bundle b.
C)bundle b is twice as desirable as a.
D)bundle b is preferred to bundle a.

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Multiple Choice

Q 24Q 24

If the utility number associated with consumption bundle a is exactly half the utility number associated with bundle b, then:
A)bundle b is twice as desirable as a.
B)bundle b is preferred to bundle a.
C)bundle b offers as much utility as two of bundle a.
D)bundle a is preferred to bundle b.

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Multiple Choice

Q 25Q 25

Indifference curves provide a way to graphically represent:
A)the income level of an individual.
B)an individual's preferences.
C)the relative price of goods.
D)the constraints faced by consumers.

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Multiple Choice

Q 26Q 26

The utility function assigns a utility number that is higher for:
A)more expensive bundles.
B)more preferred bundles.
C)less preferred bundles.
D)bundles which the individual is indifferent between.

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Multiple Choice

Q 27Q 27

Consider the following preference statements: (7, 9)is preferred to (5, 8); (18, 0)is preferred to (7, 9); and (5, 8)is preferred to (6, 5). If the individual's preferences are consistent, then the preferences ordering over these four consumption bundles is:
A)(7, 9), (5, 8), (18, 0), (6, 5).
B)(18, 0), (5, 8), (7, 9), (6, 5).
C)(18, 0), (7, 9), (5, 8), (6, 5).
D)(5, 8), (6, 5), (18, 0), (7, 9).

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Multiple Choice

Q 28Q 28

The rate at which a consumer is willing to exchange one good for another, and maintain a constant level of satisfaction is:
A)the marginal rate of substitution.
B)the relative price ratio.
C)the value of marginal product.
D)the relative expenditure ratio.

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Multiple Choice

Q 29Q 29

Indifference curves are not:
A)downward sloping.
B)continuous.
C)insatiable.
D)intersecting.

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Multiple Choice

Q 30Q 30

Which of the following is a psychological assumption?
A)self interest
B)common property
C)perfect competition
D)resource endowment

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Multiple Choice

Q 31Q 31

Which of the following is not required for the existence of a utility function?
A)completeness
B)universality
C)continuity
D)nonsatiation

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Multiple Choice

Q 32Q 32

In Figure 2A (a):
A)c is preferred to d, d is preferred to e, e is preferred to c.
B)e is preferred to c, e is preferred to d, c is indifferent to d.
C)c is preferred to e, d is preferred to e, c is indifferent to d.
D)d is indifferent to c, d is indifferent to e, e is indifferent to c.

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Multiple Choice

Q 33Q 33

Tim consumes goods x and y. His utility function is given by U(x,y)= y(x + 5). Which of the following is true?
A)Tim prefers bundle (1,2)to bundle (2,1)
B)Tim likes good x but hates good y.
C)Tim likes good y but hates good x.
D)Tim prefers bundle (7,3)to bundle (3,7).

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Multiple Choice

Q 34Q 34

If an indifference curve has a kink, then:
A)the indifference curve is not convex to the origin.
B)the marginal rate of substitution is a meaningless concept.
C)preferences are normal.
D)the marginal rate of substitution is undefined at the kink.

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Multiple Choice

Q 35Q 35

Utility functions assign a:
A)preference ordering to each individual.
B)service truck to each customer request.
C)unique number to each indifference curve.
D)unique indifference curve to each number.

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Multiple Choice

Q 36Q 36

Sheila has preferences represented by the utility function U (x, y)= 8x + 4y. She consumes 12 units of good x and 3 units of good y. If her consumption of good x is lowered to 10, how many units of y must she have in order to be exactly as well off as before?
A)10 units of good y
B)5 units of good y
C)12 units of good y
D)7 units of good y

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Multiple Choice

Q 37Q 37

If Henry decides to give up his social life in order to be more productive at work, an economist would consider this:
A)hedonistic.
B)inevitable.
C)one of life's many trade offs.
D)contrary to maximizing behaviour.

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Multiple Choice

Q 38Q 38

If the indifference curves for some individual are vertical straight lines, the utility function is:
A)U(x,y)= x + 2y.
B)U(x,y)= xy.
C)U(x,y)= x

^{2}^{ }+ 5. D)U(x,y)= 2xy^{2}^{ }^{.}Free

Multiple Choice

Q 39Q 39

If the utility number associated with consumption bundle a is exactly twice the utility number associated with bundle b, then:
A)bundle a is preferred to bundle b.
B)bundle b is preferred to bundle a.
C)bundle a offers as much utility as two of bundle b.
D)bundle a is twice as desirable as b.

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Multiple Choice

Q 40Q 40

The value of a good is determined by:
A)the amount of resources used to produce it.
B)the maximum amount of goods in the market.
C)the amount of time it takes to produce it.
D)the maximum amount that one is willing to sacrifice to get it.

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Multiple Choice

Q 41Q 41

Scarcity means that:
A)our desire for a good exceeds the amount that is freely available.
B)at the current market price there is a shortage of the good.
C)we are unable to find a particular good in any of the stores we visit.
D)a particular good is difficult to produce.

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Multiple Choice

Q 42Q 42

If Jane's utility function is given by U = xy:
A)Jane prefers bundle (1,3)to bundle (2,5).
B)Jane is indifferent between bundle (2,2)and bundle (2,1).
C)Jane prefers bundle (2,2)to bundle (3,3).
D)Jane is indifferent between bundle (1,2)and bundle (2,1).

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Multiple Choice

Q 43Q 43

The utility function U(x

_{1},x_{2})= min(x_{1},x_{2})is an apt description of preferences when: A)x_{1 }is money and x_{2 }is cocaine. B)x_{1}_{ }is $5 bills and x_{2}_{ }is $5 bills. C)x_{1}_{ }is a Coke and x_{2}_{ }is a Pepsi. D)x_{1 }is a left hand glove and x_{2 }is a right hand glove.Free

Multiple Choice

Q 44Q 44

If x

_{1 }is good and x_{2 }is bad, then indifference curves: A)have a positive slope. B)cannot be linear. C)have a negative slope. D)are not smooth.Free

Multiple Choice

Q 45Q 45

When two goods are perfect substitutes, they will have:
A)indifference curves with a slope equal to +1.
B)indifference curves that slope upward.
C)linear indifference curves.
D)indifference curves that are kinked.

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Multiple Choice

Q 46Q 46

For the utility function: U = x + y

^{2}, the MRS is given by: (calculus required) A)x/2. B)1/2y. C)1/2. D)x/2y.Free

Multiple Choice

Q 47Q 47

The nonsatiation assumption says that given any two consumption bundles, if bundle 1 has more of one good and does not contain less of any other good then:
A)the individual is indifferent between bundle 1 and all other bundles.
B)bundle 1 is never preferred to others.
C)all other bundles are preferred to bundle 1.
D)bundle 1 is preferred to other bundles.

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Multiple Choice

Q 48Q 48

The completeness assumption implies that:
A)indifference curves are convex.
B)the individual is indifferent between all bundles.
C)indifference curves are smooth.
D)any two points in the x - y space can be ranked.

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Multiple Choice

Q 49Q 49

Horizontal indifference curves imply that:
A)the goods are perfect complements.
B)the consumer gets no utility from the Y axis good.
C)the consumer gets no utility from the X axis good.
D)the goods are perfect substitutes.

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Multiple Choice

Q 50Q 50

The utility function U(x,y)= 2x + y is an apt description of the preferences when:
A)x is a left shoe and y is a right shoe.
B)x is nickels and y is quarters.
C)x is nickels and y is dimes.
D)x is pizza and y is cola.

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Multiple Choice

Q 51Q 51

An indifference curve represents:
A)a complete preference ordering.
B)consumption bundles of equivalent value.
C)average preferences.
D)complete apathy.

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Multiple Choice

Q 52Q 52

Mary's utility function is U(x,y)= 4x

^{1/2 }+ y. She has 25 units of x and 12 units of y. If her consumption of x is reduced to 0, how many units of y would she need in order to be exactly as well off as before? A)112 units B)32 units C)37 units D)48 unitsFree

Multiple Choice

Q 53Q 53

Anna's preferences can be expressed by the utility function U(x

_{1}, x_{2})= x_{1}_{ }+ x_{2}. Which of the following does NOT represent the same preferences? A)U(x_{1}, x_{2})= (x_{1}_{ }+ x_{2})2 B)U(x_{1}, x_{2})= ln(x_{1 }+ x_{2})+ 12 C)U(x_{1}, x_{2})= x_{1}_{ }+ 4x_{2}_{ }D)U(x_{1}, x_{2})= 1000(x_{1 }+ x_{2})Free

Multiple Choice

Q 54Q 54

Which of the following assumptions implies that bundles on indifference curves further from the origin are preferred to bundles closer to the origin?
A)non- satiation.
B)transitivity.
C)homogeneity
D)completeness.

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Multiple Choice

Q 55Q 55

Given the utility function U(x

_{1},x_{2})= x_{1}_{ }+ 2x_{2}, the marginal rate of substitution (MRS)is: A)equal to 1/2. B)undefined. C)equal to 2. D)zero.Free

Multiple Choice

Q 56Q 56

In Figure 2A, which of the following curves represents a weakly convex indifference curve?
A)Figure 2A (a)
B)Figure 2A (b)
C)Figure 2A (c)
D)Figure 2A (d)

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Multiple Choice

Q 57Q 57

If Al's indifference curves are downward sloping straight lines, then Al's marginal rate of substitution is:
A)increasing.
B)constant.
C)zero.
D)diminishing.

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Multiple Choice

Q 58Q 58

If an individual turns down more spinach at dinner, this individual:
A)is violating the principle of diminishing marginal rate of substitution.
B)is not maximizing.
C)is not violating any postulates and could still be maximizing.
D)is violating the principle of substitution.

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Multiple Choice

Q 59Q 59

Indifference curves between left shoes and right shoes are:
A)smooth and convex.
B)upward sloping.
C)downward sloping straight lines.
D)L- shaped.

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Multiple Choice

Q 60Q 60

Suppose Jane enjoys coffee (x)but is allergic to tea (y). Which of the following utility functions would best represent Tim's utility function for coffee and tea?
A)U(x,y)= min[x,y]
B)U(x,y)= x + y
C)U(x,y)= xy
D)U(x,y)= x/y

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Multiple Choice

Q 61Q 61

If people regard pollution as a bad thing, then their indifference curves for pollution and income (P,
I)are:
A)kinked.
B)upward sloping.
C)undefined.
D)convex.

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Multiple Choice

Q 62Q 62

When Doug is asked whether he would prefer sweetbreads and kumquats or tripe and starfruit, he replies "I don't know". This is a violation of which assumption?
A)Non- satiation
B)Consistency.
C)Completeness
D)Transitivity

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Multiple Choice

Q 63Q 63

Given the following utility function, U(x

_{1},x_{2})= x_{1}_{ }* x_{2}, which of the following does not represent the same preference ordering: A)x_{1}x_{2}_{ }+ 15. B)(x_{1}x_{2})^{2}. C)x_{1}_{ }+ x_{2}. D)x_{1}x_{2 }- 1000.Free

Multiple Choice

Q 64Q 64

If x

_{1 }is $20 bills and x_{2 }is $100 bills, then: A)the utility function is x + 5z. B)indifference curves have many kinks. C)the marginal rate of substitution is 5. D)the marginal rate of substitution is 1/5.Free

Multiple Choice

Q 65Q 65

The increase in the size of shopping carts for the past three decades is due to:
A)the increase in the income per capita over time.
B)the intention of store owners to sell more.
C)the decrease in the cost of producing the carts.
D)the increase in the opportunity cost of time.

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Multiple Choice

Q 66Q 66

The nonsatiation assumption implies that:
A)indifference curves do not cross.
B)indifference curves have a negative slope.
C)indifference curves have a positive slope.
D)indifference curves are continuous.

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Multiple Choice

Q 67Q 67

Given the utility function U(x

_{1},x_{2})= min(x_{1},x_{2}), the marginal rate of substitution when x_{1}_{ }equals X_{2 }is: A)undefined. B)zero. C)infinite. D)one.Free

Multiple Choice

Q 68Q 68

Which of the following statements about indifference curve analysis is false?
A)Indifference curve analysis is identical to the n- good problem.
B)Indifference curve analysis is a special case of the n- good problem.
C)Indifference curve analysis simplifies the n- good problem for detailed study.
D)Indifference curve analysis relies on the same assumptions as the n- good problem.

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Multiple Choice

Q 69Q 69

Cheryl is always willing to trade 3 cheeseburgers for a bucket of shrimp. Her indifference curves are:
A)bowed in to the origin
B)straight lines
C)L- shaped
D)bowed out from the origin

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Multiple Choice

Q 70Q 70

Which of the following are necessary assumptions to guarantee that an individual can consistently rank any set of consumption bundles?
A)completeness and non- satiation
B)transitivity and non satiation
C)completeness and universality
D)transitivity and completeness

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Multiple Choice

Q 71Q 71

In Figure 2A, the utility function for some individual is U(x

_{1},x_{2})=x_{1}x_{2}. An indifference curve for this individual is depicted in: A)Figure 2A (a). B)Figure 2A (b). C)Figure 2A (c). D)Figure 2A (d).Free

Multiple Choice

Q 72Q 72

Which of the following is a scarce commodity?
A)fresh air
B)stock market advice
C)air
D)pollution

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Multiple Choice

Q 73Q 73

A consumer's set of indifference curves provides:
A)a relative ranking of bundles that provide more of all goods.
B)a mechanism to determine market equilibria.
C)a complete ranking of all possible consumption bundles.
D)a ranking of a set of bundles on an indifference curve.

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Multiple Choice

Q 74Q 74

The continuity assumption implies that:
A)the indifference curves are smooth.
B)the indifference curves are continuous.
C)the indifference curves never cross.
D)the indifference curves are convex.

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Multiple Choice

Q 75Q 75

Given the utility function U(x

_{1},x_{2})= min(x_{1},x_{2}), the marginal rate of substitution when x_{1}_{ }exceeds X_{2 }is: A)undefined. B)one. C)zero. D)infinite.Free

Multiple Choice

Q 76Q 76

Which of the following is required for the existence of a utility function?
A)transitivity
B)relativity
C)universality
D)satiation

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Multiple Choice

Q 77Q 77

The transitivity assumption implies that:
A)indifference curves measure preferences.
B)indifference curves are convex.
C)indifference curves never cross.
D)indifference curves are smooth.

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Multiple Choice

Q 78Q 78

If an indifference curve is convex, the marginal rate of substitution is not:
A)the rate at which an individual is willing to trade goods.
B)constant.
C)a function.
D)minus one times the slope of an indifference curve.

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Multiple Choice

Q 79Q 79

The nonsatiation assumption:
A)is saying that individuals always maximize.
B)is a formal way of saying that more is always better.
C)implies that indifference curves have a positive slope.
D)is a well founded empirical truth.

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Multiple Choice

Q 80Q 80

People smooth out consumption over time:
A)because they become wiser as they age.
B)because older people require less consumption.
C)because utility of consumption increases with age.
D)to raise their level of utility.

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Multiple Choice

Q 81Q 81

Tom currently has 100 units of x

_{1}_{ }and 50 units of x_{2}, and Jan has 50 units of x_{1}_{ }and 100 units of x_{2}. If Tom's marginal rate of substitution is 10, and Jan's is 1: A)Pareto- improving trades involve Jan giving up x_{2 }for x_{1}. B)Pareto- improving trades involve Tom giving up x_{1}_{ }for x_{2}. C)Pareto- improving trades between Jan and Tom do not exist. D)Pareto- improving trades exist but cannot be assessed given the above information.Free

Multiple Choice

Q 82Q 82

One of the factors influencing the increase in the size of shopping carts for the past three decades is:
A)the increase in the cost of produce storage at home.
B)the average weight of Canadians increase by 15%.
C)the continued entrance of women into the workforce.
D)the fact that people eat out less.

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Multiple Choice

Q 83Q 83

The slope of an indifference curve reflects:
A)the income of a consumer.
B)the relative value that a consumer places on one commodity compared to another.
C)the relative price of two commodities.
D)the utility number associated to the utility function.

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Multiple Choice

Q 84Q 84

Utility numbers provide:
A)positive information to society.
B)precise differences between consumption bundles.
C)normative information to society.
D)positive information to individuals.

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Multiple Choice

Q 85Q 85

The basic reason there are so many excellent substitutes for water in almost all Canadian cities is that:
A)the demand for water is inelastic.
B)the supply of water is limited.
C)there are so many alternative drinks readily available in the marketplace.
D)water is so inexpensive that people use it for many different purposes.

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Multiple Choice

Q 86Q 86

Consider the choice between an economic bad, air pollution, and a measure of expenditure on all other goods, income. The MRS of the indifference curves in this space:
A)is zero.
B)is positive.
C)is negative.
D)is not defined properly.

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Multiple Choice

Q 87Q 87

Given the following utility function, U(x

_{1},x_{2})= x_{1}_{ }+ x_{2}, which of the following preference statements is not true? A)(1, 9)is preferred to (3, 5) B)(1, 4)is indifferent to (2, 2) C)(100, 0)is preferred to (1, 1) D)(4, 4)is indifferent to (3, 5)Free

Multiple Choice

Q 88Q 88

Along a standard, downward sloping, convex indifference curve the marginal rate of substitution is:
A)constant.
B)decreasing.
C)positive.
D)increasing.

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Multiple Choice

Q 89Q 89

Consider four consumption bundles, denoted by A, B, C, and D. Which of the following sets of preference statements violates the transitivity assumption?
A)D is preferred to C, C is preferred to B, B is preferred to A, C is preferred to A.
B)A is preferred to B, B is preferred to C, C is preferred to D, A is preferred to C.
C)D is preferred to B, C is preferred to A, A is preferred to B, B is preferred to C.
D)A is preferred to C, B is preferred to A.

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Multiple Choice

Q 90Q 90

Sharon's utility function can be expressed as U(x

_{1}, x_{2})= 7x_{1}^{0.25}x_{2}^{0.75}. How much good 2 is she willing to give up to get one unit of good 1 if she currently has 10 units of good 1 and 30 units of good 2?Free

Essay

Q 91Q 91

When asked if he wants another beer, Kevin says "no thanks". Is this a violation of the non- satiation assumption?

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Essay

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Essay

Q 95Q 95

Is an indifference curve defined as a set of bundles that a consumer with a given income can afford, and among which he or she is indifferent?

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Essay

Q 96Q 96

The nonsatiation assumption implies that more is preferred to less. Can two bundles that contain different amounts of good 1 but the same amount of good 2 be on the same indifference curve?

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Essay

Q 97Q 97

Does a diminishing marginal rate of substitution imply that an individual requires increasing amounts of one good as he gives up more and more of the other good to remain at the same utility level?

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Essay

Q 98Q 98

Consider the following utility functions:
i)U(x, y)= xy

^{1/2}ii)U(x, y)= 10xy iii)U(x, y)= 3x + 4y iv)U(x, y)= 2x + ln(y) v)U(x, y)= x^{3}a)Construct an indifference curve for each of these functions. b)Calculate the MRS for each of these functions. (Calculus required)Free

Essay

Q 99Q 99

Consider the following list of statements. Each statement in the list means the same thing as one of the other statements. Identify the pairs of statements which are equivalent:
a)consumers always prefer to have more of a good;
b)consumers' preferences are complete;
c)consumers' preferences are transitive;
d)every market basket has an indifference curve associated with it;
e)indifference curves are bowed in to the origin;
f)indifference curves are downward sloping;
g)indifference curves do not cross;
h)a diminishing MRS is a characteristic of consumer preferences.

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Essay

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Essay

Q 101Q 101

Consider the following utility function:
U(x, y)= 2x + 3y
a)Draw the indifference curve associated with utility numbers 12 and 24.
b)How does MRS change as we move from one indifference curve to another along the horizontal line y = 2? What about when y = 3?

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Q 102Q 102

Jane's utility function is given by: U(x, y)= xy

^{2}. i)Is Jane indifferent between bundles (2,1)and (1,2)? ii)Suppose Jane consumes 3 units of x and 2 units of y. If Jane increases her consumption of x by 1 unit but decreases her consumption of y by 1 unit, will she move to a lower indifference curve? iii)Calculate the MRS when x = 3 and y = 2. (Calculus required)Free

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Q 103Q 103

Consider the following utility function: U(x,y)= 2y + x

^{1/3}a)What is the shape of an indifference curve (e.g., smooth, kinked, straight line)? Is the MRS diminishing? b)How does the MRS change as you move from the indifference curve associated with the utility number 8 to the indifference curve associated with the utility number 27 when x = 2? What about when x = 3? (Calculus required)Free

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