mt1prackey - KEY Practice MT #1 Section I MC 1 e 2 b 3 a 4...

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KEY Practice MT #1 Section I MC 1 e 2 b 3 a 4 e 5 b 6 b 7 b 8 c SECTION II 1. a) Bundle of 3 bowling balls and 2 coffee mugs costs $12 and has a utility of 157. No affordable bundle has a higher utility. bBundle of 1 bowling ball and 2 coffee mugs costs $12 and has a total utility of 97. No affordable bundle has a higher utility. c) Bowling ball market (1, 6) P (3, 2) Bowling balls d) Utility of 6 mugs = 99. Utility of 4 bb’s = 115. Total utility = 99+115 = 214 Utility of 4 mugs = 91. Utility of 5 bb’s = 123. Total utility = 91+123 = 214 e) MRS is slope of IC. Estimate slope between these two points. Since coffee on x- axis, slope = 2 1 6 4 4 5 - = - - = MRS
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2. a) Ham 25 50 Hot Dog 50 (iii) 20 100 (i) (ii) B iFalse this bundle costs $100 so not on that budget. ii) False. MRS at (18,10) = 5. Since (17, 15) has less x, then MUx goes up. It also has more y so MUy goes down. Both of these make MRS go up, so MRS is greater than 5. cI can find two points on the demand for bread using budgets (i) and (iii).
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This note was uploaded on 02/28/2011 for the course ECO 304K taught by Professor Hickenbottom during the Spring '10 term at University of Texas at Austin.

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mt1prackey - KEY Practice MT #1 Section I MC 1 e 2 b 3 a 4...

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