Practice final 2009
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1. In Problem 2, Ambrose has indifference curves with the equation
, where larger
constants correspond to higher indifference curves. If good 1 is drawn on the horizontal axis and good 2 on
the vertical axis, what is the slope of Ambrose’s indifference curve when his consumption bundle is (1, 11)?
a.
b.
c.
–12
d. –2
e.
–1
____
2. In Problem 9, if we graph Mary Granola’s indifference curves with avocados on the horizontal axis and
grapefruits on the vertical axis, then whenever she has more grapefruits than avocados, the slope of her
indifference curve is –2. Whenever she has more avocados than grapefruits, the slope is
. Mary would
be indifferent between a bundle with 9 avocados and 15 grapefruits and another bundle with 15 avocados and
a.
13 grapefruits.
b. 11 grapefruits.
c.
7 grapefruits.
d. 9 grapefruits.
e.
10 grapefruits.
____
3. In Problem 1, Charlie’s utility function is
U
(
A
,
B
) =
AB
, where A and
B
are the numbers of apples and
bananas, respectively, that he consumes. If Charlie is consuming 35 apples and 175 bananas, then if we put
apples on the horizontal axis and bananas on the vertical axis, the slope of his indifference curve at his current
consumption is
a.
–36.
b. –10.
c.
.
d. –5.
e.
.
____
4. In Problem 2, Ambrose has the utility function
U
(
x
1
,
x
2
) =
. If Ambrose were initially
consuming 4 units of nuts (good 1) and 23 units of berries (good 2), then what is the largest number of berries
that he would be willing to give up in return for an additional 45 units of nuts?
a.
30
b. 7
c.
10
d. 20
e.
5
____
5. Joe Bob’s cousin Peter consumes goods 1 and 2. Peter thinks that 4 units of good 1 is always a perfect
substitute for 2 units of good 2. Which of the following utility functions is the only one that would NOT
represent Peter’s preferences?
a.
U
(
x
1
,
x
2
) = min{ 2
x
1
, 4
x
2
}.
b.
U
(
x
1
,
x
2
) = 20
x
1
+ 40
x
2
– 10,000.
c.
U
(
x
1
,
x
2
) = 2
x
1
+ 4
x
2
+ 1,000.
d.
U
(
x
1
,
x
2
) = 4
x
2
1
+ 16
x
1
x
2
+ 16
x
2
2
.
e.
More than one of the above does not represent Peter’s preferences.