Final+Test+2 - ZX Y Total Product V ECO2003F: INTERMEDIATE...

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V Y Total Product X Z ECO2003F: INTERMEDIATE MICROECONOMICS TEST 2 MARCH 2008 This test comprises of 20 multiple choice questions and has 9 pages including the cover page. Each question has a randomly assigned penalty of either 0, -0.5 or -1; which is shown on the right hand side of each question in square brackets and in bold. There are 5 options to choose from (A to E). In each question there are 4 answers to choose from (A to D); whilst E must be filled in if you plan to abstain from answering the question. Questions that are abstained by pencilling in E will receive no marks and no penalty (receive zero). If you do not fill in E and plan to abstain, then you will receive a penalty of 1 for that question. That is, blank answers receive a penalty of 1. In all of the cases below, choose the MOST correct answer The following equation for utility must be used to answer questions 1-2. 1
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1. Consider an individual, consuming just two goods; x and y, with utility function of the form U(x,y)=x 2/5 y 3/5 . Assume that consumption of goods x and y is 5 units each. What is the slope of the individual’s indifference curve at this point? If consumption of good x decreased from 5 to 4 units, how many units of y would you have to give the consumer in order to return her to her previous level of well-being ( Round your answers to the nearest half unit.) [Pen. 0] A) Slope= -3/2, Change in y=1 B) Slope= -2/3, Change in y=6 C) Slope= -2/3, Change in y=1 D) Slope= -3/2, Change in y=6 E) Abstain 2. x & p y respectively? [Pen. 1] A) x*= 5m2px B) x*= 3mpx C) x*= 2m5px D) x*= m3px E) Abstain 3. Assume that a consumer maximises utility when consuming 4 units of x and 6 units of y. If the slope of the indifference curve is -1/3 at this point and the price of good x is R8, what is the total value of the consumer’s budget for that week? (Round your answer to the closest rand). [Pen. 0] A) R48 B) R88 C) R96 D) R176 E) Abstain 4. Complete the this statement with the most correct combination: …………. can be considered an inferior good and it’s Engel curve is ………. . sloping; which would also hold true if the good was a/an ………. . good. [Pen. 0.5] A) (South African minibus taxis services, upward, normal)
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Final+Test+2 - ZX Y Total Product V ECO2003F: INTERMEDIATE...

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