econ212 practice problems1

econ212 practice problems1 - econ 212 Practice Problems 1....

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econ 212 Practice Problems 1. True/False Indicate whether the statement is true or false AND EXPLAIN WHY BRIEFLY. ____ 1. At the optimum, a consumer’s indifference curve must be tangent to her budget line. ____ 2. Max Gross has the utility function U ( x , y ) = max{ x , y } . If the price of x is the same as the price of y , Max will buy equal amounts of x and y . ____ 3. Clara’s utility function is U ( x , y ) = ( x + 2)( y + 1). If her consumption of both x and y are doubled, then her marginal rate of substitution between x and y remains constant. ____ 4. Charlie’s utility function is U ( x , y ) = xy 2 . His marginal rate of substitution between x and y does not change if the amount of both goods doubles. ____ 5. Ambrose’s utility function is U ( x , y ) = x + 4 y 1/2 . The price of x is $1 and the price of y is $2. If his income rises from $100 to $150, his consumption of y increases by more than 10% but less than 50%. ____ 6.
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This note was uploaded on 01/26/2010 for the course ECONOMICS EC212 taught by Professor Yu during the Spring '08 term at Mt. Holyoke.

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econ212 practice problems1 - econ 212 Practice Problems 1....

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