Old Mirco exam

Old Mirco exam - ECO 201.003 Dr. Adrian Austin Exam 1 Good...

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ECO 201.003 Dr. Adrian Austin Exam 1 Good Luck! Write your name legibly (10 points) ____________________________ Section I (50 points) True/False Indicate whether the statement is true or false. ____ 1. A consumer prefers more to less of every good. Her income rises, and the price of one of the goods falls while other prices stay constant. These changes must have made her better off. ____ 2. If someone has the utility function U = 1,000 + 2 min { x , y }, then x and y are perfect complements for that person. ____ 3. A consumer with convex preferences who is indifferent between the bundles (5, 2) and (11, 6) will like the bundle (8, 4) at least as well as either of the first two bundles. ____ 4. Angela’s utility function is U ( x 1 , x 2 ) = ( x 1 + x 2 ) 3 . Her indifference curves are downward-sloping, parallel straight lines. ____ 5. Henrietta’s utility function is U ( x 1 , x 2 ) = x 1 x 2 . She has diminishing marginal rate of substitution between goods 1 and 2. ____ 6. If one utility function is a monotonic transformation of another, then the former must assign a higher utility number to every bundle than the latter. ____ 7. Other things being equal, a lump sum tax is at least as good for a consumer as a sales tax that collects the same revenue from him. ____ 8. When other variables are held fixed, the demand for a Giffen good rises when income increases.
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Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 9. The Chuzzlewits have an income of $m per week. Let x be food and let y be all other goods. Let p x be the price of food and p y be the price of other goods. They can use food stamps to buy food at a price of p x (1 – s ) for up to x* units of food per week. If they buy more food than x* , they have to pay the full price p x for additional units. Their weekly income is greater than p x (1 – s ) x* . The maximum amount of food that they can buy per week is a. b. c. d.
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Old Mirco exam - ECO 201.003 Dr. Adrian Austin Exam 1 Good...

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