Homework 1

# Homework 1 - Econ3101 Section 003 Intermediate...

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Unformatted text preview: Econ3101 - Section 003 Intermediate Microeconomics Xavier Vinyals-Mirabent * Department of Economics University of Minnesota. Due: Tuesday, February 8th, 2011. Homework 1. The homework will be due at the beginning of the class. Late homework (within the day) will receive partial credit. Very late homework will receive no credit. The maximum score is 100 points. Make sure to do all parts to all problems and do them clearly for full credit. * Borrowed from Erick Sager with permission. 1 1. A consumer has preferences for two goods. Her preferences satisfy Axioms 1 through 4 as discussed in class. 5 10 5 10 (a) Plot and label the following bundles: A (2,10) B (6,2) C (0,4) D (8,10) E (4,6) (b) Assume A is indifferent to B ( A ∼ B ). On a single line, list all the bundles in descending order of preference using ( ) to denote strict preference and ( ∼ ) to denote indifference between adjacent pairs. In other words, use the form: A B C D E 2 2. Consider an economic agent who has preferences that are represented by the utility function: u ( x,y ) = √ xy (a) for each pair of bundles A and B, indicate whether A B , A ≺ B , or A ∼ B (but of course change the letters according to the bundles you are comparing). A B A(4,7) B(7,10) C(8,4) D(2,8) E(7,3) F(6,9) G(10,10) H(9,6) (b) Using the bundles in (a.), make a list that orders the bundles according to the agent’s preferences. Start with the most preferred bundle and end with the leastagent’s preferences....
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Homework 1 - Econ3101 Section 003 Intermediate...

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