Homework1 - Homework 1 ECO 303 Spring 2008 Name ID Note...

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Homework 1 Name: ______________________ ECO 303 Spring 2008 ID: _________________________ Note: Please use additional paper to write down your answers, together with your name and your ID. True/False(30pt) Indicate whether the statement is true or false. If the answer is false, explain why 1. If there are two goods with positive prices and the price of one good is increased, while income and other prices remain constant, then the size of the budget set is reduced. 2. If preferences are transitive, more is always preferred to less. 3. Wanda Lott has the utility function U(x, y) = max{x, y}. Wanda’s preferences are convex. 4. If a consumer does not have convex preferences, then a point of tangency between her indifference curve and her budget line must be an optimal consumption point. 5. An Engel curve for good x is an price consumption curve for good x. 6. A person with the utility function U(x, y) = 10 x 2 y has convex preferences. 7. When other variables are held fixed, the demand for a Giffen good rises when income increases. 8. If all prices are doubled and money income is left the same, the budget set does not change because relative prices do not change. 9. With quasi-linear preferences, the slope of indifference curves is constant along all rays through the origin. 10.
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Homework1 - Homework 1 ECO 303 Spring 2008 Name ID Note...

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