Unformatted text preview: Instead of discarding the lower grade, Professor Stern discards the higher one. Again, let x = score on midterm 1 and let y = score on midterm 2 and assume $Px = $Py = $5. What midterm grades bundle in economics will maximize Nancy’s utility subject to her budget constraint? (Use your utility functions from PS#1 – XtraQ.) c) If you were giving Nancy advice on what class to take, econ or communications, what would you tell her? 2) Suppose that Max has the utility function u(x, y) = x(y + 1). The price of x is $2 and the price of y is $1. Income is $10. How much x does Max demand? How much y? If his income doubles and prices stay unchanged, will Max's demand for both goods double? Econ 313.1  Wissink  Fall 2005 PS#2  XtraQ DUE: Monday Sept. 19 at the START of class....
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 Fall '06
 MASSON
 Economics, Utility, Neoclassical economics, Professor Stern, Nancy Lerner

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