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practice_exam - Multiple Choice 1 Which statement is true a...

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Page 1 of 3 Multiple Choice 1. Which statement is true? a. A Giffen good is a normal good. b. A Giffen good may or may not be a normal good. c. An inferior good is a Giffen good. d. A Giffen good is an inferior good. e. None of the above. 2. Which of the following is NOT a monotonic transformation of 1 2 U x x = for 1 2 0, 0 x x > > . 3. The utility function for a consumer is given by 1 2 ( ) U f x x = + . At the initial optimal bundle the consumer buys 5 units of 1 x and 2 units of 2 x . After a change in circumstances the new optimal bundle has 1 5 x = and 2 5 x = . After the change in consumption, relative to the initial consumption bundle, the 2 1 x x MRS will
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