Econ Assignment #2.pdf

# Econ Assignment #2.pdf - Professor Lu´ıs Cabral...

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Professor Lu´ ıs Cabral Microeconomics Fall 2018 Problem Set 2 Instructions. Submit at lecture on Mon day, Septem ber 24. Write (you don’t need to type) your answers on separate paper (not on this sheet of paper). Please include: your name; your recitation teacher’s name; day and time of the recitation. NB: if your recitation takes place on Monday morning, you must submit your assignment to your teacher at the beginning of the recitation. 1. Bananas. Suppose a consumer’s utility derived from consuming bananas ( x ) is described by the function U ( x ) = 10 x + 3 x 2 - 1 3 x 3 (a) Compute marginal utility. (b) Make a table showing total and marginal utility for x from 0 to 7 units. (c) Would this individual ever choose to consume more than 7 units? Explain. 2. Indifference curve. Sketch one indifference corresponding to the following utility function: U ( x, y ) = 3 min { x, y } + y 3. Budget constraint. True, false, or uncertain; explain your answer. If you know the slope of the budget constraint for two goods, you know the prices of the two goods.

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