Summer07Exam2

Summer07Exam2 - Quiz 2, ECON 100A, Professor Raymundo...

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Quiz 2, ECON 100A, Professor Raymundo Rodriguez, Summer 2007 Bubble-in your Name, Perm #, and Test Version (see top-right corner) on your scantron. Identify the choice that best completes the statement or answers the question. ____ 1. When prices are ($6, $3), Holly chooses the bundle (9, 18), and when prices are ($1, $2), she chooses the bundle (8, 14). a. The bundle (9, 18) is revealed preferred to (8, 14) and she does not violate WARP. b. She violates SARP but not WARP. c. The bundle (8, 14) is revealed preferred to (9, 18) and she does not violate WARP. d. She violates WARP. e. None of the above. ____ 2. When the prices were ($5, $1), Vanessa chose the bundle ( x , y ) = (6, 3). Now at the new prices, ( p x , p y ), she chooses the bundle ( x , y ) = (5, 7). For Vanessa’s behavior to be consistent with the weak axiom of revealed preference, it must be that a. 4 p y < p x . b. p x < 4 p y . c. 5 p y < p x . d. p y = 5 p x . e. None of the above. ____ 3. If Goldie chooses the bundle (6, 6) when prices are ($6, $2) and the bundle (10, 0) when prices are ($2, $5), a. the bundle (6, 6) is revealed preferred to (10, 0) but there is no evidence that she violates WARP. b. neither bundle is revealed preferred to the other. c. Goldie violates WARP. d. the bundle (10, 0) is revealed preferred to (6, 6) and she violates WARP. e. the bundle (10, 0) is revealed preferred to (6, 6) and she is not violating WARP. ____ 4. On the planet Homogenia, every consumer who has ever lived consumes only two goods, x and y, and has the utility function U ( x , y ) = xy . The currency in Homogenia is the fragel. In this country in 1900, the price of good 1 was 1 fragel and the price of good 2 was 2 fragels. Per capita income was 96 fragels. In 2000, the price of good 1 was 4 fragels and the price of good 2 was 5 fragels. The Laspeyres price index for the price level in 2000 relative to the price level in 1900 is a. 3.25. b. 4.50. c. 3. d. 5.25. e. It is not possible to determine the Laspeyres price index from this information. ____ 5.
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Summer07Exam2 - Quiz 2, ECON 100A, Professor Raymundo...

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