1)
Professor Goodheart always gives two midterms in his communications class.
He only uses
the higher of the two scores that a student gets on the midterms when he calculates the course
grade.
a)
Nancy Lerner wants to maximize her grade in this course.
Let x be her score on the first
midterm and let y be her score on the second midterm.
Which combination of scores
would Nancy prefer, (x = 20 and y = 70) or (x = 60 and y = 60)?
b)
On a graph draw an indifference curve showing all of the combinations of scores that
Nancy likes exactly as much as (x = 20 and y = 70).
Also draw an indifference curve
showing the combinations that Nancy likes exactly as much as (x = 60 and y = 60).
c)
Does Nancy have convex preferences over these combinations?
d)
Nancy is also taking a course in economics form Professor Stern.
Professor Stern gives
two midterms.
Instead of discarding the lower grade, Professor Stern discards the higher
one.
Let x = score on midterm 1 and let y = score on midterm 2.
Which combination of
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 Fall '06
 MASSON

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