Discussion2-1

# Discussion2-1 - Econ 100A/Summer 09 Discussion#2 1 Miss...

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Econ 100A/Summer 09 Discussion #2 1. Miss Muffet insists on consuming 1 unit of whey per 1 unit of curds. If the price of curds is \$5 and the price of whey is \$3, then if Miss Muffet's income is \$m, her demand for curds will be (a) m/5. (b) 3m/5. (c) 5c+3w=m. (d) 5m. (e) m/8. Answer: (e) 2. At prices (\$4,\$12), Harry chooses the bundle (9,4). At the prices (\$8,\$4), Harry chooses the bundle (2,9). Is this behavior consistent with the WARP? (a) Yes. (b) No. (c) It depends on his income. (d) We would have to observe a third choice to be able to say. (e) None of the above. Answer: (a) 3. Bob lives in a town where he has to pay \$5 per glass of wine and \$3 per loaf of bread. Bob consumes 4 glasses of wine and 5 loaves of bread per day. Henri has an income of \$20 per day and pays \$1 per loaf of bread and \$3 per glass of wine. If Henri has the same tastes as Bob and if the only thing that either of them cares about is consumption of bread and wine, (a) Bob and Henri are equally well off. (b) Bob is better off than Henri.

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Discussion2-1 - Econ 100A/Summer 09 Discussion#2 1 Miss...

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