SectionWS6 - Vodka Water 1) Do these preferences satisfy...

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Econ 100A - Worksheet #6 Preferences Exercise 1 A person has been observed to express the following preferences among commodity bundles: (10 , 40) f (20 , 20) , (5 , 6) (2 , 7) , (20 , 20) f (12 , 38) , (18 , 24) (19 , 20) , (12 , 38) f (11 , 40) . Can this person satisfy all axioms of consumer theory? Why? Exercise 2 A basketball coach states that among two would-be players, he always prefers the tallest and fastest. Is this preference relation transitive? Is this preference relation complete? Exercise 3 Jane hates studying economics and and history. The more time she spents studying any of these subjects, the less happy she is. Her preferences are convex however. 1) Draw some possible indiFerence curves for Jane’s preferences in the ( H,E ) space, where H is the number of hours spent studying history and E the number of hours spent studying economics. 2) What does convexity imply in this context? Give an example. 3) Is the MRS increasing of diminishing? Exercise 4 Consider the following set of indiFerence curves (or the following indiFerence map):
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Unformatted text preview: Vodka Water 1) Do these preferences satisfy the three basic axioms of consumer theory as stated in lecture? [Warning: here the IC are slightly thick but this is just to make them stand out more on the picture.] 2) What is the value of the MRS of water for vodka at any commodity bundle? 3) What is the value of the MRS of vodka for water at any commodity bundle? 4) Give an economic interpretation of these preferences. Exercise 5 The inhabitants of planet WEIRD have three legs and therefore three feet: two left and one right. They also like to wear shooes. Draw the indiFerence curves of the Weirdoites in the ( L,R ) space, where L is the number of left shoes and R the number of right shoes. [Hint: start from the bundle (1 , 2) and nd the indiFerent bundles. Proceed identically for bundle (4 , 2) .] 1...
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