HW2_Soln

# HW2_Soln - HOMEWORK 2 SOLUTIONS DUE IN CLASS 6th February...

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HOMEWORK 2 SOLUTIONS DUE : IN CLASS 6 th February 2009 (Friday) ECON 80A Professor: Paroma Sanyal Microeconomic Theory 126 Sachar Bldg. Brandeis University (781) 736-2268 Spring 2009 [email protected] Total Points 100 Section 1: Multiple Choice Questions (2 points each) (Total 22 points) 1. If the consumer's budget constraint is given by 10F + 5S = 100 where F is food and S is shelter, how much food can he buy if he purchases 2 units of shelter? A) 10 B) 5 C) 20 D) 9 E) none of the above Answer: D 2. An increase in income with no changes in the price of either good will cause A) an inward shift of the budget curve. C) no change in the budget curve. B) an outward shift of the budget curve. D) none of the above. Answer: B 3. I prefer 10 apples and 6 oranges to 9 apples and 3 oranges. This is an example of : A) transitivity. B) completeness. C) more is better. D) none of the above. Answer: C 4. What assumptions are necessary to prevent indifference curves from crossing? A) transitivity B) completeness C) more is better D) a and c E) b and c Answer: D 5. The marginal rate of substitution is A) the absolute value of the slope of the indifference curve. B) the tradeoff between the two goods under consideration at any particular point. C) the total utility derived at any point. D) all of the above. E) a and b. Answer: E 1

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6. The budget constraint shown below is consistent with a pricing strategy that involves a y X Answer: B 7. According to the rational choice model, food stamps are inefficient because A) they limit consumer choice. D) of a and b. B) consumers may prefer other goods. E) of none of the above. C) they may lead to obesity. Answer: D 8. Perfect substitutes will have indifference curves which are A) concave. B) convex. C) linear (a straight line). D) L - shaped. E) none of the above. Answer: C 9. On a typical budget constraint, the opportunity cost of food in terms of shelter is A) Pf/Ps. B) Ps/Pf. C) the inverse of the opportunity cost of shelter in terms of food. D) a and c. E) b and c. Answer: D 10. When someone optimally chooses a consumption bundle, the MRS equals A) the ratio of the prices of the goods. B) the opportunity cost of one good in terms of the other.
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## This note was uploaded on 10/15/2011 for the course ECON 82 taught by Professor Demsetz during the Spring '09 term at Brandeis.

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HW2_Soln - HOMEWORK 2 SOLUTIONS DUE IN CLASS 6th February...

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