lab 2 - September 27-October 1 2010 Economics 203...

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September 27-October 1, 2010 Economics 203: Intermediate Microeconomics I Lab Exercise #2 Section 1: Test Your Understanding True or False? 1) If the consumer’s tastes were transitive, the consumer would have inconsistent or contradictory preferences. 2) According to the theory of consumer behaviour, the consumer’s equilibrium market basket is the one which yields maximum utility, given the constraints imposed on the consumer by his or her income and by prices. 3) A consumer buys two goods, U and V. If the price of a unit of U is equal to the price of a unit of V, the slope of the consumer’s budget line is –1. Section 2: Applied Questions Question 1) Suppose Sandy gets the same utility from each of the 6 combinations of goods Z and W shown below. Good Z costs $10 per unit and good W costs $4 per unit. Commodity Combination 1 2 3 4 5 6 Amount of good W (units) 1 2 4 7 11 16 Amount of good Z (units) 10 9 8 7 6 5 a) What is the minimum income she musts have to achieve the level of utility associated with these commodity combinations?
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This note was uploaded on 08/03/2011 for the course ECON 203 taught by Professor Okhan during the Spring '11 term at University of Victoria.

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lab 2 - September 27-October 1 2010 Economics 203...

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