PS3 - Graduate Microeconomics I Problem Set 3 Fall 2010 -...

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Graduate Microeconomics I Problem Set 3 Fall 2010 - ECARES Prof. Georg Kirchsteiger T.A. Ester Manna 1. You are given the following information about a consumer’s purchases. He consumes only two goods: Year 1 Year 2 Quantity Price Quantity Price Good 1 100 100 120 100 Good 2 100 100 ? 80 Over which range of quantities of good 2 consumed in year 2 would you conclude: (a) That the consumer’s consumption bundle in year 1 is revealed preferred to that in year 2 and WARP is satis f ed? (b) That the consumer’s consumption bundle in year 2 is revealed preferred to that in year 1 and WARP is satis f ed? (c) That is behaviour is inconsistent, i.e., in contradiction with the weak axiom? 2. Ginger and Fred are married. Ginger makes all the decisions about how to spend their family income w and divide the purchases. She does this in such a way that she maximizes her utility function subject to the constraint that Fred’s utility is at least equal to a given level
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This note was uploaded on 02/01/2011 for the course ECONOMY 6 taught by Professor Fallahi during the Spring '10 term at Cambridge.

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PS3 - Graduate Microeconomics I Problem Set 3 Fall 2010 -...

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