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 f es the f rst 3 axioms of consumer preference. (Hint: For example, the completeness axiom is satis f 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 , f 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
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This note was uploaded on 07/17/2008 for the course ECON 501.02 taught by Professor Yang during the Spring '08 term at Ohio State.

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Econ501aH1S07 - The Ohio State University Department of...

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