{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

PS3 - Intermediate Microeconomics 2008 Problem Set No 3 due...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Intermediate Microeconomics, 2008 Problem Set No 3 due: Jan, 16 / 17 Problems From Varian, p52: 1) Consider three people, A,B,C and the relation “at least as old as”. Is this relation transitive? Is it complete? 2) For the same group of three people, consider the relation “strictly older than”. Is this relation transitive? Is it complete? 3) Suppose a trainer wants to pick among a group of players and suppose he always weakly prefers someone who is bigger and faster. Is his preference relation complete? Is it transitive? 4) What is your marginal rate of substitution between $10 Bills and $1 Bills? 5) What is the marginal rate of transformation between a $10 Bill and a 10Euro Bill? 6) What are some goods for which you might have concave (or at least not weakly convex) preferences? General Note: Unless otherwise stated, you can safely assume that all parameters and quan- tities are weakly positive ( 0). We will either clearly state if this is not the case or it will be clear from the content of the question. Note that parameters can still be zero! 7) We learned in class that utility is all about ordering. Suppose someone has preferences represented by the utility function U ( q 1 , q 2 ) = aq 1 + bq 2 . Suppose someone else has preferences given by the utility function U ( q 1 , q 2 ) = aq 1 + bq 2 + 5 . 1. Draw their indifference curves for fixed values of the parameters a and b . How would they rank the bundles A = (1 , 1) and B = ( 1 2 , 2 ) depending on a and b ? Do they rank A and B differently? 8) Suppose two individuals have utility functions U 1 ( q 1 , q 2 ) = q 1 q 2 and U 2 ( q 1 , q 2 ) = aq 1 q 2 . Do they have the same preferences? You might want to try the bundle from Problem 7. (Note well that a 0 includes a = 0.) 9) The book claims that the following two utility functions are the same: U 1 ( q 1 , q 2 ) = f ( q 1 , q 2 ) (where f ( q 1 , q
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern