Unformatted text preview: b. Explain the consumer equilibrium in words. 3. Suppose that the MU of socks equals the MU of Tshirts. If the price of socks is less than the price of Tshirts, what will a rational consumer do? 4. Suppose that the MU of ice cream is 100 utils and the price of ice cream is $2.00. If the price of cookies is $1, and the consumer is in equilibrium, what is the MU of a cookie? 5. Joe Cool wants to purchase either a Mazda Miata or a Porsche. Suppose that the Miata yields 100,000 jollies, while the Porsche yields 200,000. The price of the Miata is $18,000 while the Porsche is $54,000. Using utility theory, state an explanation for which car Joe will buy. 6. For each question you missed on Exam 1, write a convincing explanation: explain why the incorrect response is wrong and why the correct answer is right....
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 Winter '09
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 Economics, Utility, Neoclassical economics, Porsche, Miata, marginal utility analysis

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