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Homework%202 - NORTH CAROLIIINA STATE UNIIIVERSIIITY NORTH...

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1 N N N O O O R R R T T T H H H C C C A A A R R R O O O L L L I I I N N N A A A S S S T T T A A A T T T E E E U U U N N N I I I V V V E E E R R R S S S I I I T T T Y Y Y College of Management – Department of Economics Instructor: Kosmas Marinakis 2 nd Homework Assignment Questions with (*) are optional. Remember solving the homework is necessary for doing well on the tests but is not sufficient. Chapter 3 1. What are the four basic assumptions about individual preferences? Explain the significance or meaning of each. 2. Can a set of indifference curves be upward sloping? If so, what would this tell you about the two goods? 3. Explain why two indifference curves cannot intersect. 4. Jon is always willing to trade one can of coke for one can of sprite, or one can of sprite for one can of coke. a. What can you say about Jon’s marginal rate of substitution? b. Draw a set of indifference curves for Jon. c. Draw two budget lines with different slopes and illustrate the satisfaction-maximizing choice.
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