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sample quiz 1

# sample quiz 1 - Name Recitation teachers name and time day...

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Name: Recitation teacher’s name and time + day of recitation: Microeconomics (Fall 2010) Sample Quiz 1 You have 15 minutes to complete the quiz. Good luck. Suppose that David has preferences for hours watching ice hockey (where H is the number of hours he watches ice hockey) and for hours watching basketball (where B is the number of hours watching basketball), where these preferences can be represented by the following utility function: U(H,B) = 8H + 4B a. (4 points) What does it mean for David’s preferences to be ‘continuous’? If one hour of ice hockey and three hours of basketball is preferred to four hours of basketball alone, then anything close to one hour of ice hockey and three hours of basketball is preferred to four hours of basketball alone. b. (4 points) Write down in words what is meant by David’s marginal rate of substitution for ice hockey versus basketball. The number of hours of watching ice hockey David is willing to substitute for an additional hour of watching basketball.

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