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Microeconomics, ECO 100A, Spring 2009, Dr. Famulari
Midterm 1A:
250 points total
Name_______________________________________Student ID_________________________
You must show your work to get credit for your answers
Question 1: 15 points
Question 2: 15 points
Question 3: 25 points
Question 4: 30 points
Question 5: 20 points
Question 6: 30 points
Question 7:
25 points
Question 8: 20 points
Question 9:
70 points
Total:
250 points
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View Full Document 1. (15 points)
Describe in words the completeness axiom.
What does this preference axiom imply about indifference
curves
?
2.
(15 points)
Ellie’s utility is a function of tomatoes, T, and dumplings, D, and so U(T, D).
At commodity bundle (10,
10), Ellie’s utility is 20 and her marginal rate of substitution is 2.
If Ellie’s indifference curves exhibit diminishing
Marginal Rates of Substitution, what is the most you can say about Ellie’s utility from the commodity bundle (8, 12)?
Explain your answer carefully.
3.
(25 points total)
Use the commodity bundles below to answer parts A and B.
X
Y
Bundle A
1
1
Bundle B
2
4
Bundle C
3
3
3A. (15 points)
Suppose you ask Toni to rank order the above three commodity bundles:
A, B, and C.
Toni tells you
that she ranks them as follows:
B
A, B
C, and A~C.
Are Toni’s preferences rational?
Explain your answer
carefully.
If Toni’s preferences are not rational, then what axiom do her preferences violate?
3B.
(10 points)
Give a utility function that represents Toni’s preferences.
Question 4.
(30 points)
Suppose
2
2
2
3
)
,
(
y
x
y
x
U
+
=
.
A.
(15 points) What is the slope of the indifference curves for this utility function?
B.
(15 points)
Do these indifference curves exhibit diminishing MRS?
Prove your answer carefully.
Question 5:
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This note was uploaded on 10/19/2010 for the course ECON 100A 100A taught by Professor Famulari during the Spring '09 term at UCSD.
 Spring '09
 Famulari

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