Section7 - Aniko Oery University of California, Berkeley...

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Unformatted text preview: Aniko Oery University of California, Berkeley Section 7: Review Econ 100A, MICRO-ECONOMIC ANALYSIS, Spring 2010 Today we will discuss those practice questions from old handouts that we have not covered so far. Almost all of the problems are from the 3rd edition of the textbook Microeconomics by Bersanko and Braeutigam. 1 Consumer Preferences and Utility functions 1. Jimmy has the following utility function for hot dogs: U ( H ) = 10 H- H 2 , with MU H = 10- 2 H . a) Plot the utility and marginal utility functions on two separate graphs. b) Suppose that Jimmy is allowed to consume as many hot dogs as he likes and that hot dogs cost him nothing. Show, both algebraically and graphically, the value of H at which he would stop consuming hot dogs. 2. Carlos has a utility function that depends on the number of movies and the number of operas seen each month. His utility function is given by U = xy 2 , where x is the numbers of movies seen per month and y is the number of operas seen per month. The corresponding marginal utilities are given by: MU x = y 2 and MU y = 2 xy . a) Does Carlos believe that more is better for each good? b) Does Carlos have a diminishing marginal utility for each good? 3. Consider the utility function U ( x, y ) = x- 2 y 2 , MU x = 1, MU y =- 4 y ....
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Section7 - Aniko Oery University of California, Berkeley...

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