2009ps2

# 2009ps2 - BUAD 351 Economic Analysis for Business Decisions...

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BUAD 351 - Economic Analysis for Business Decisions Homework 2 due: Thu 02/12/2009 PART (i): multiple choice please provide the answers in the following box: question answer 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1. A marginal rate of substitution formula tells us a. The rate at which the consumer is willing to exchange one good for another, given the level of utility b. The rate at which the consumer is willing to exchange one good for another, given the amounts consumed c. The rate at which the consumer is willing to exchange one good for another, given the consumer°s income d. The rate at which the consumer is willing to exchange one good for another, given the prices of the goods 2. Let Tom°s utility function be U ( C; M ) = C + 3 p M , where C is liters of Coke and M is liters of Mountain Dew. Compute Tom°s utility if he consumes 8 liters of Coke and 9 liters of Mountain Dew. 3. Teresa consumes both steak and lobster. Suppose the formula for her indi/erence curves is S = U ° 1 : 5 L , where S stands for the number of steaks, L stands for the number of lobsters and U represents utility. Which of the following bundles would Teresa prefer? 1

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• Fall '07
• Eastin

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