Question 1

Oswald Odd consumes only goods 1 and 2.His utility function is U(x1, x2)=x1 + x2 + min{x1, x2}.Each of Oswald's indifference curves is

Accepted Answer

A) L-shaped. 
B) made up of three line segments with slopes -2, -1, and -1/2. 
C) made up of two line segments with slopes -2 and -1/2. 
D) is smooth and has no kinks. 
E) is a diamond-shaped figure consisting of four line segments. 
A) L-shaped. 
B) made up of three line segments with slopes -2, -1, and -1/2. 
C) made up of two line segments with slopes -2 and -1/2. 
D) is smooth and has no kinks. 
E) is a diamond-shaped figure consisting of four line segments.

Question 2

Molly's utility function is U(x, y)= y + 4x.5.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?

Accepted Answer

A) 48 
B) 37 
C) 32 
D) 112 
E) None of the above. 
A) 48 
B) 37 
C) 32 
D) 112 
E) None of the above.

Question 3

Mr.Surly consumes only two goods and hates them both.His utility function is U(x, y)=2max{x, y}.Mr.Surly has (weakly)convex preferences.

Accepted Answer

A) True 
 B)False

Question 4

Use separate graphs to draw indifference curves for each of the following utility functions:
a.U(x, y)= min{x + y,2y + x}.
b.U(x, y)=max{2x + y,2y + x}.
c.U(x, y)= x + min{x, y}.In which of these cases are preferences convex?

Accepted Answer

If you take a point on the line x = y an

Question 5

Victor Finick likes to have the same amount of x as he has of y.His utility function is U(x, y)= min{2x- y, 2y- x}.
a.Draw the indifference curve for Victor that passes through the bundle (0, 0)and the indifference curve that passes through (4, 4).(Hint: Each indifference curve is the intersection of two line segments.)
b.If Victor has a bundle that he likes better than (0, 0)and his consumption of both goods is doubled, is Victor better off?
c.Does Victor always prefer more of either good to less?

Accepted Answer

a.Victor's indifference curves are V-sha

Question 6

Wanda Lott has the utility function U(x, y)= max{x, y}.Wanda's preferences are convex.

Accepted Answer

A) True 
 B)False

Question 7

A person with utility function U(x, y)= 5 + y2 + 2x has nonconvex preferences.

Accepted Answer

A) True 
 B)False

Question 8

Charlie has the utility function U(xA, xB)= xAxB.His indifference curve passing through 35 apples and 18 bananas will also pass through the point where he consumes 5 apples and

Accepted Answer

A) 131 bananas. 
B) 137 bananas. 
C) 21 bananas. 
D) 42 bananas. 
E) 126 bananas. 
A) 131 bananas. 
B) 137 bananas. 
C) 21 bananas. 
D) 42 bananas. 
E) 126 bananas.

Question 9

Janet consumes x1 and x2 together in fixed proportions.She always consumes 2 units of x1 for every unit x2.One utility function that describes her preferences is

Accepted Answer

A) U(x1, x2)=2x1x2. 
B) U(x1, x2)=2x1 = x2. 
C) U(x1, x2)=x1 + 2x2. 
D) U(x1, x2)=min{2x1, x2}. 
E) U(x1, x2)=min{x1, 2x2}. 
A) U(x1, x2)=2x1x2. 
B) U(x1, x2)=2x1 = x2. 
C) U(x1, x2)=x1 + 2x2. 
D) U(x1, x2)=min{2x1, x2}. 
E) U(x1, x2)=min{x1, 2x2}.

Question 10

The utility function U(x1, x2)= 2lnx1 + 3lnx2 represents Cobb-Douglas preferences.

Accepted Answer

A) True 
 B)False

Question 11

Quasilinear preferences are homothetic when the optimal amount of good 1 is not affordable.

Accepted Answer

A) True 
 B)False

Question 12

Jim's utility function is U(x, y)= xy.Jerry's utility function is U(x, y)= 1,000xy = 2,000.Tammy's utility function is U(x, y)= xy(1 - xy).Oral's utility function is -1/(10 + xy.Billy's utility function is U(x, y)= x/y.Pat's utility function is U(x, y)= -xy.

Accepted Answer

A) No two of these people have the same preferences. 
B) They all have the same preferences except for Billy. 
C) Jim, Jerry, and Pat all have the same indifference curves, but Jerry and Oral are the only ones with the same preferences as Jim. 
D) Jim, Tammy, and Oral all have the same preferences. 
E) None of the above. 
A) No two of these people have the same preferences. 
B) They all have the same preferences except for Billy. 
C) Jim, Jerry, and Pat all have the same indifference curves, but Jerry and Oral are the only ones with the same preferences as Jim. 
D) Jim, Tammy, and Oral all have the same preferences. 
E) None of the above.

Question 13

Alice's utility function is U(x, y)=x2y.Steve's utility function is U(x, y)= x2y + 2x.Alice and Steve have the same preferences since Steve's utility function is a monotonic transformation of Alice's.

Accepted Answer

A) True 
 B)False

Question 14

Isabella's utility function is U(x, y)= 4min{x, y} + y.If we draw her indifference curves with x on the horizontal axis and y on the vertical axis, these indifference curves are

Accepted Answer

A) L-shaped with kinks where x = y. 
B) made up of two line segments that meet where x = y.One of these line segments is horizontal and the other has slope -4. 
C) L-shaped with kinks where x = 5y. 
D) made up of two line segments that meet where x = 5y.One of these line segments is vertical and the other has slope -1. 
E) V-shaped with kinks where x =4y. 
A) L-shaped with kinks where x = y. 
B) made up of two line segments that meet where x = y.One of these line segments is horizontal and the other has slope -4. 
C) L-shaped with kinks where x = 5y. 
D) made up of two line segments that meet where x = 5y.One of these line segments is vertical and the other has slope -1. 
E) V-shaped with kinks where x =4y.

Question 15

A consumer has preferences represented by the utility function U(x1, x2)=10(x21 + 2x1x2 - x22)-0 50.For this consumer, goods 1 and 2 are perfect substitutes.

Accepted Answer

A) True 
 B)False

Question 16

A consumer has a utility function of the form U(x, y)= x a + y b, where both a and b are nonnegative.What additional restrictions on the values of the parameters a and b are imposed by each of the following assumptions?
a.Preferences are quasilinear and convex, and x is a normal good.
b.Preferences are homothetic.
c.Preferences are homothetic and convex.
d.Goods x and y are perfect substitutes.

Accepted Answer

A) a = 1 and b is be

Question 17

Ambrose has the utility function U(x1, x2)= 4x1/21 + x2.If Ambrose is initially consuming 64 units of nuts and 10 units of berries, then what is the largest number of berries that he would be willing to give up in return for an additional 17 units of nuts?

Accepted Answer

A) 9 
B) 19 
C) 4 
D) 2 
E) 1 
A) 9 
B) 19 
C) 4 
D) 2 
E) 1

Exam 3: Utility-Part A

Oswald Odd consumes only goods 1 and 2.His utility function is U(x1, x2)=x1 + x2 + min{x1, x2}.Each of Oswald's indifference curves is

Molly's utility function is U(x, y)= y + 4x.5.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?

Mr.Surly consumes only two goods and hates them both.His utility function is U(x, y)=2max{x, y}.Mr.Surly has (weakly)convex preferences.

Use separate graphs to draw indifference curves for each of the following utility functions: a.U(x, y)= min{x + y,2y + x}. b.U(x, y)=max{2x + y,2y + x}. c.U(x, y)= x + min{x, y}.In which of these cases are preferences convex?

Wanda Lott has the utility function U(x, y)= max{x, y}.Wanda's preferences are convex.

A person with utility function U(x, y)= 5 + y2 + 2x has nonconvex preferences.

Charlie has the utility function U(xA, xB)= xAxB.His indifference curve passing through 35 apples and 18 bananas will also pass through the point where he consumes 5 apples and

Janet consumes x1 and x2 together in fixed proportions.She always consumes 2 units of x1 for every unit x2.One utility function that describes her preferences is

The utility function U(x1, x2)= 2lnx1 + 3lnx2 represents Cobb-Douglas preferences.

Quasilinear preferences are homothetic when the optimal amount of good 1 is not affordable.

Jim's utility function is U(x, y)= xy.Jerry's utility function is U(x, y)= 1,000xy = 2,000.Tammy's utility function is U(x, y)= xy(1 - xy).Oral's utility function is -1/(10 + xy.Billy's utility function is U(x, y)= x/y.Pat's utility function is U(x, y)= -xy.

Alice's utility function is U(x, y)=x2y.Steve's utility function is U(x, y)= x2y + 2x.Alice and Steve have the same preferences since Steve's utility function is a monotonic transformation of Alice's.

Isabella's utility function is U(x, y)= 4min{x, y} + y.If we draw her indifference curves with x on the horizontal axis and y on the vertical axis, these indifference curves are

A consumer has preferences represented by the utility function U(x1, x2)=10(x21 + 2x1x2 - x22)-0 50.For this consumer, goods 1 and 2 are perfect substitutes.

Ambrose has the utility function U(x1, x2)= 4x1/21 + x2.If Ambrose is initially consuming 64 units of nuts and 10 units of berries, then what is the largest number of berries that he would be willing to give up in return for an additional 17 units of nuts?

Budget Constraint-Part A

Budget Constraint-Part B

Preferences-Part A

Preferences-Part B

Utility-Part B

Choice-Part A

Choice-Part B

Demand-Part A

Demand-Part B

Revealed Preference-Part A

Revealed Preference-Part B

Slutsky Equation-Part A

Slutsky Equation-Part B

Buying and Selling-Part A

Buying and Selling-Part B

Intertemporal Choice-Part A

Intertemporal Choice-Part B

Asset Markets-Part A

Asset Markets-Part B

Uncertainty-Part A

Uncertainty-Part B

Risky Assets-Part A

Risky Assets-Part B

Consumers Surplus-Part A

Consumers Surplus-Part B

Market Demand-Part A

Market Demand-Part B

Equilibrium-Part A

Equilibrium-Part B

Auctions-Part A

Auctions-Part B

Technology-Part A

Technology-Part B

Profit Maximization-Part A

Profit Maximization-Part B

Cost Minimization-Part A

Cost Minimization-Part B

Cost Curves-Part A

Cost Curves-Part B

Firm Supply-Part A

Firm Supply-Part B

Industry Supply-Part A

Industry Supply-Part B

Monopoly-Part A

Monopoly-Part B

Monopoly Behavior-Part A

Monopoly Behavior-Part B

Factor Markets-Part A

Factor Markets-Part B

Oligopoly-Part A

Oligopoly-Part B

Game Theory-Part A

Game Theory-Part B

Game Applications-Part A

Game Applications-Part B

Behavioral Economics

Exchange-Part A

Exchange-Part B

Production-Part A

Production-Part B

Welfare-Part A

Welfare-Part B

Externalities-Part A

Externalities-Part B

Oswald Odd consumes only goods 1 and 2.His utility function is U(x₁, x₂)=x₁ + x₂ + min{x₁, x₂}.Each of Oswald's indifference curves is

Molly's utility function is U(x, y)= y + 4x^.5.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 person with utility function U(x, y)= 5 + y² + 2x has nonconvex preferences.

Charlie has the utility function U(x_A, x_B)= x_Ax_B.His indifference curve passing through 35 apples and 18 bananas will also pass through the point where he consumes 5 apples and

Janet consumes x₁ and x₂ together in fixed proportions.She always consumes 2 units of x₁ for every unit x₂.One utility function that describes her preferences is

The utility function U(x₁, x₂)= 2lnx₁ + 3lnx₂ represents Cobb-Douglas preferences.

Alice's utility function is U(x, y)=x²y.Steve's utility function is U(x, y)= x²y + 2x.Alice and Steve have the same preferences since Steve's utility function is a monotonic transformation of Alice's.

A consumer has preferences represented by the utility function U(x₁, x₂)=10(x²₁ + 2x₁x₂ - x²₂)-0 50.For this consumer, goods 1 and 2 are perfect substitutes.

Ambrose has the utility function U(x₁, x₂)= 4x^1/2₁ + x₂.If Ambrose is initially consuming 64 units of nuts and 10 units of berries, then what is the largest number of berries that he would be willing to give up in return for an additional 17 units of nuts?