Exam 2: A Theory of Preferences

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.

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?

Traffic in the city moves along as well as it does (i.e., few accidents, reasonable speed)because:

If x₁ is good and x₂ is bad, then indifference curves:

A vegetarian's indifferent curve in a space defined by hamburgers on the horizontal axis and broccoli on the vertical axis:

Indifference curves are not:

Which of the following assumptions implies that bundles on indifference curves further from the origin are preferred to bundles closer to the origin?

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

Economists assume that an individual's preference orderings include all of the following except:

Which of the following is not required for the existence of a utility function?

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?

Which of the following is consistent with the transitivity assumption?

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:

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?

The increase in the size of shopping carts for the past three decades is due to:

People driving on a four- lane expressway during the rush hour tend to distribute their vehicles fairly evenly among the four lanes because:

Is the indifference curve between ice cream and garbage positively sloped?

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:

Given the utility function U(x₁,x₂)= min(x₁,x₂), the marginal rate of substitution when x₁ exceeds X₂ is:

Along a standard, downward sloping, convex indifference curve the marginal rate of substitution is: