Deck 1: Preferences and Utility

Question 1

For this utility function,the MRS

A)depends on the values of x and y.
B)is always 0.
C)is always 2.
D)is always 4.

Answer 1

C

Question 2

Which of the following utility functions best represents the idea that two goods,x and y,are perfect complements?

A)
B)U(x,y)= x + y.
C) .
D)U(x,y)= min (x,y).

Answer 2

D

Question 3

If utility is given by ,then the person's MRS at the point x = 5,y = 2 is given by

A)0.4.
B)1.0.
C)2.5.
D)5.0.

Answer 3

A

Question 4

With this utility function,the bundle (3,2)provides the same utility as the bundle

A)(2,3).
B)(2,4).
C)(2,5).
D)(3,3).

Question 5

If an individual's utility function is quasi-concave,his or her MRS will

A)diminish as x is substituted for y.
B)increase as x is substituted for y.
C)be undefined except in special cases.
D)always depend only on the ratio of x to y.

Question 6

Which of the following utility functions represent the same preferences as ?

A) .
B)U(x,y)= x  y.
C)U(x,y)= ln x + ln y.
D)All of these represent the same preferences.

Question 7

For an individual who consumes only two goods,x and y,the opportunity cost of consuming one more unit of x in terms of how much y must be given up is reflected by

A)the individual's marginal rate of substitution.
B)the market prices of x and y.
C)the slope of the individual's indifference curve.
D)none of these is correct.

Question 8

If bundles of goods A and B lie on the same indifference curve,one can assume the individual

A)prefers bundle A to bundle B.
B)prefers bundle B to bundle A.
C)enjoys bundle A and B equally.
D)bundle A contains the same goods as bundle B.

Question 9

Which of the following utility functions would not be consistent with the notion that x and y are both "goods" with positive marginal utilities?

A) .
B)U(x,y)= x + y .
C) .
D)U(x,y)= x/y .

Question 10

If utility is given by ,this person's indifference curves are

A)parabolas.
B)hyperbolas.
C)concentric circles.
D)straight lines.

Question 11

Indifference curves

A)are non?intersecting.
B)are contour lines of a utility function.
C)are negatively sloped.
D)all of these are correct.

Question 12

If utility is given by U(x,y)= Min (x,3y)then the bundle (3,2)provides the same utility as the bundle

A)(1,3).
B)(2,3).
C)(4,1).
D)(4,2).