Intermediate Microeconomics: A Modern Approach, Seventh Edition

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ECONOMICS 300 FIRST MIDTERM SPRING 2005 PLEDGE:____________________________ NAME:______________________________ Questions 1-3 refer to the following graph. When Bill goes to the ballpark, he gets utility from purchasing hotdogs (H) and Cola (C). Several indifference curves from his indifference map and his budget constraint are shown on the graph below. 5 8 12 20 C H 10 4 3 1. (3) Given the budget constraint drawn on the graph above, Bill’s optimal consumption bundle is the point: ___________ 2. (3) Bill is indifferent between the bundle (8, 3) and the bundle: a. (8, 4) b. (20, 0) c. (12, 4) d. (0, 10) e. none of the above. 3. (4) If the price of coke is $1, then the price of hotdogs is _______ and Bill’s income is _______. 1
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Questions 4-7 refer to the following information. Frank spends all of his money on marshmallows (M) and videogames (V). His utility function is: U(M, V) = min{2M, 4V} 4. (3) For Frank, these goods are: a. Are perfect substitutes. b. Are perfect complements. c. Are represented by Cobb-Douglas utility function. d. None of the above. 5. (3) Suppose Frank is currently consuming 10 units of M and 10 units of V. His marginal utility of M is ______ and his marginal utility of V is______.
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