380 Problem set _3-preferences

380 Problem set _3-preferences - Preferences Problem Set #3...

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Preferences Problem Set #3 Econ. 380 R. Pope W2011 Notation here is as in Nicholson and Snyder: U is utility, x and y are two goods. 1. Graph the indifference curves defined by the following utility functions and note whether they are convex (linear or bowed in towards the origin). Also give the implicit equation for each indifference curve for 50 utils. a. 3 2 U x y = + special case of perfect substitution b. U=min (x/2,y/1)-special case of perfect complements c. U = x+ln(y) special case of quasi-linearity d. U = 4x .2 y .5 special case of Cobb-Douglas Utility e. .5 2 2 4 U x y = + special case of CES Utility 2. Show that the following utility functions for x > 0,y >0, all represent the same preference order on 2 R ++ : 2 2 . . . ln( ) ln( ) . a U xy b U x y c U x y d U xy = = = + = 3. Many forms of advertising seem to be about trying to convince people to have a particular set of preferences (persuasion) or providing information. Analyze the statements below. Are they about information, persuasion, or something else entirely?
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380 Problem set _3-preferences - Preferences Problem Set #3...

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