ch4
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1.
Charlie has the utility function U(
x
A
,
x
B
) =
x
A
x
B
. His indifference curve passing through 6 apples and 16
bananas will also pass through the point where he consumes 2 apples and
a.
12 bananas.
b.
24 bananas.
c.
50 bananas.
d.
54 bananas.
e.
48 bananas.
____
2.
Charlie’s utility function is
U
(
A
,
B
) =
AB
, where
A
and
B
are the numbers of apples and bananas, respectively,
that he consumes. If Charlie is consuming 15 apples and 30 bananas, then if we put apples on the horizontal
axis and bananas on the vertical axis, the slope of his indifference curve at his current consumption is
a.
–16.
b.
–2.
c.
–4.
d.
.
e.
.
____
3.
Ambrose has the utility function
U
(
x
1
,
x
2
)
. If Ambrose were initially consuming 49 units of nuts
(good 1) and 12 units of berries (good 2), then what is the largest number of berries that he would be willing
to give up in return for an additional 32 units of nuts?
a.
9
b.
21
c.
8
d.
4
e.
2
____
4.
Joe Bob from Problem 12 has a cousin Ike who consumes goods 1 and 2. Ike thinks that 4 units of good 1 is
always a perfect substitute for 2 units of good 2. Which of the following utility functions is the only one that
would
not
represent Ike’s preferences?
a.
U
(
x
1
,
x
2
) = 2
x
1
+ 4
x
2
+ 1000.
b.
U
(
x
1
,
x
2
) = 4
x
2
1
+ 16
x
1
x
2
+ 16
x
2
2
.
c.
U
(
x
1
,
x
2
) = min{ 2
x
1
, 4
x
2
}.
d.
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 Spring '09
 AVRINRAD
 Utility, Ike

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