PS2 SP10 - Econ 100A Dr Famulari Practice Problems Week 2 1...

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Econ 100A, Dr. Famulari, Practice Problems Week 2 1. Write down a utility function and two indifference curves that represents the preferences of the following people: A. Miss Muffet likes curds (x) and whey (y). Miss Muffet considers a cup of curds to be just as good as 10 fluid ounces of whey. B. Jack Sprat can eat no fat (x), but he can always give it to his wife. She gives him lean (y), which he can never get enough of. In fact, no matter how much he gets, each additional pound of lean always gives him the same utility. C. Matt likes cheese (x) and crackers (y). He is very particular and will only eat 1 piece cheese with five crackers 2. My utility function U(x 1 ,x 2 ) satisfies the hypothesis of strictly diminishing marginal rate of substitution, both goods are economic goods for me, and I am currently at the bundle (x 1 ,x 2 )=(50,50) where MRS(50,50)=2. Can you say whether or not I would be willing to: A. Give up 20 units of x 1 in exchange for receiving 20 units of x 2 ? B. Give up 20 units of x 2 in exchange for receiving 20 units of x 1 ?
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