2008ps2

2008ps2 - BUAD 351 - Economic Analysis for Business...

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BUAD 351 - Economic Analysis for Business Decisions Homework 2 due: Wed 02/13/2008 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. According to the more-is-better principle, a. A consumer will always select the bundle that is ranked highest among all alternative bundles b. A consumer will prefer a bundle that has the largest amount of the good they prefer most c. Consumers always try to achieve the highest possible level of well-being d. When comparing two consumption bundles, a consumer prefers the bundle that has more of every good 2. 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 d. The rate at which the consumer is willing to exchange one good for another, given the prices of the goods MRS is given by the formula MRS PT = T=P , where P stands for the number of pieces of pizza and T stands for the number of tacos. Starting at 12 tacos and 4 pizzas, the consumer must receive a. 3 tacos to compensate them for the loss of one piece of pizza b. 3 pieces of pizza to compensate them for the loss of one taco c. 1/3 taco to compensate them for the loss of one piece of pizza d. 1/3 piece of pizza to compensate them for the loss of one taco U ( C;M ) = C + 3 p M , where C is liters of Coke and M is liters Dew. a. 72 b. 17 c. 35 d. none of the above 1
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5. 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? a. 10 steaks and 4 lobsters b. 9 steaks and 5 lobsters c. 12 steaks and 2 lobsters d. There is not enough information to answer the question 6. If everyone in an economy buys and sells goods at market-wide prices
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This note was uploaded on 07/23/2008 for the course BUAD 351 taught by Professor Eastin during the Spring '07 term at USC.

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2008ps2 - BUAD 351 - Economic Analysis for Business...

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