ECON 301
Professor S. Severinov
PROBLEM SET 1
Due: January 21
in class (by 1:45pm)
(Late Problem Sets will not be accepted)
1.
Exercise 1, Ch.1 (p18.)
2.
Review Question 9, Ch2. (p. 62)
3.
Review Question 11, Ch2. (p. 62)
4.
Exercise 1, Ch 2. (p.62)
5.
Exercise 14, Ch. 3 (p.109)
6.
Exercise 16, Ch. 3 (p. 109)
7.
Suppose that Colin’s preferences for goods
X
and
Y
can be represented by the utility
function
U
(
x
,
y
)=min{
x
,
y
}, where
x
(respectively,
y
) is the amount of
X
(respectively,
Y
) that he consumes. min{
x
,
y
} is a function that gives the minimum of the two
numbers
x
and
y
. For example, min{3,5}=3, min{4,2}=2, and min{1,1}=1.
a)
Give a real world example for such preferences and for goods
X
and
Y
.
b)
Draw the indifference curve along which Colin has a utility of 4.
c)
Suppose that the price of both
X
and
Y
is $1, and Colin’s income is $12. What is his
optimal consumption bundle? What if the price of
X
is $1 and the price of
Y
is $2?
d)
This is the end of the preview.
Sign up
to
access the rest of the document.
 Spring '08
 CHAPPLE
 Utility

Click to edit the document details