103assn3summer09

103assn3summer09 - Principles of Microeconomics Neil...

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Principles of Microeconomics Neil Roberts ECON 103 Summer 2009 Assignment #3 (30 marks) Due: Monday, July 06, 2009 1. For each of the following situations, decide whether the bundle Emily is thinking about consuming is optimal or not. If it is not optimal, how could Emily improve her overall level of utility? That is, on which good should she spend more, and on which good should she spend less? Explain. (5 marks each) a. Emily has $200 to spend on sneakers and sweaters. Sneakers cost $50 a pair, while sweaters cost $20 each. She is thinking about buying 2 pairs of sneakers and 5 sweaters. She tells her friend that the additional satisfaction she gets from the second pair of sneakers is the same as the additional satisfaction she gets from the fifth sweater. b. Emily has $50 per season to spend on tickets to hockey games and football games. Each hockey ticket costs $10 and each football ticket costs $5. She is thinking about buying 3 hockey tickets and 2 football tickets. Her marginal utility from the third hockey ticket is twice as much as her marginal utility from the second football ticket. 2.
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This note was uploaded on 12/07/2010 for the course ECON ECON 103 taught by Professor S during the Spring '10 term at Simon Fraser.

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103assn3summer09 - Principles of Microeconomics Neil...

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