# HW2 - Intermediate Microeconomics Homework Assignment#2 You...

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Intermediate Microeconomics – Homework Assignment #2 You are permitted to work in small groups, but you must hand in individual answers.  The assignment is due at  the start of class on Tuesday, February 24.  No make-up assignment will be provided, and late homework will  receive a grade of zero.  On questions indicated “TFU and explain:” you must indicate whether the following  statement is True, False, or Uncertain, and explain your economic reasoning.  All points will be earned based on  the soundness of your reasoning.  Answer all questions neatly on separate sheets of paper. 1. TFU and explain: All the points lying on a budget constraint have higher utility than all points interior to  the budget constraint. (Hint: A diagram would be useful) 2. Amanda has a utility function for coke and French fries that is U=120C 0.25 F 0.25 , where U is utility, C is  the amount of coke, and F is the amount of French fries.  Based on this utility function the marginal  utility of coke is 30C -0.75 F 0.25 , and the marginal utility of French fries is 30C 0.25 F -0.75 .   a.

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