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Econ501aH1S07

# Econ501aH1S07 - The Ohio State University Department of...

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The Ohio State University Department of Economics Econ 501.02—Prof. James Peck Homework #1 (due Wednesday, April 11) 1. Suppose we have the utility function, U = x 2 y 3 . (a) Find the function for the marginal rate of substitution. (b) Show that this utility function satis fi es the fi rst 3 axioms of consumer preference. (Hint: For example, the completeness axiom is satis fi ed if for any two bundles A and B, either bundle A gives more utility than B when evaluated according to the function U, or B gives more utility than A, or the utility numbers of A and B are the same.) 2. Suppose we have the utility function, U = 2 xy + x + y. (a) Find the function for the marginal rate of substitution. (b) If prices are p x = \$2 and p y = \$4 , and if income is M = \$17 , fi nd the utility maximizing consumption bundle. 3. Suppose we have the utility function, U = x + 3 y. (a) Find the function for the marginal rate of substitution. (b) If prices are p x = \$2 and p y = \$4 , and if income is M = \$200 , fi

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Econ501aH1S07 - The Ohio State University Department of...

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