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E100LectureNotes3

E100LectureNotes3 - Lecture 3 1 Leontief U(x1,x2)=min[x1/a...

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 1/4/2008 1 Lecture 3
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 1/4/2008 2 Leontief: U(x 1 ,x 2 )=min[x 1 /a, x 2 /b] Question 1 Tequila, Margarita mix 1 oz tequilla, 4 oz margarita mix = 1 margarita If I have 1 oz tequilla and 4 oz Marg mix, how much utility do I get from 1 more oz of Tequila? A. 0 B. infinity C. 1 D. Can’t tell
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 1/4/2008 3 Leontief: Graphical analysis 1 oz tequilla, 4 oz margarita mix = 1 margarita X T X M 1 4 (1,4) (2,8)
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 1/4/2008 4 Leontief: Numerical analysis Question 2 1 oz tequilla, 4 oz margarita mix = 1 margarita Describe with: U=min[x T ,x m /4] What is U(1,4)? A. 4 B. 1 C. Can’t tell X T X M U(x T ,x M )=c 1 4 (1,4) (2,8)
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 1/4/2008 5 Leontief: Numerical analysis  Question 3 U=min[x T ,x m /4] What is U(1,5)? A. 5/4 B. 1 C. 4 What is U(1,6)? What is U(1,7)? What is U(1, billion)? X T X M U(x T ,x M )=c 1 4 (1,4) (2,8)
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 1/4/2008 6 Leontief: Numerical analysis  Question 4 U=min[x T ,x m /4] What is U(2,4)? A. 2 B. 1 C. 4 What is U(3,4)? What is U(4,4)? What is U(billion, 4)? Note could also have used U=min[4x T ,x M ] X T X M U(x T ,x M )=c 1 4 (1,4) (2,8)
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 1/4/2008 7 Leontief: Marginal utilities  Question 5 U=min[x T ,x m /4] What is mu T (X T ,X m ) at X T >X m /4 A. 0 B. 1 C. infinity X T X M U(x T ,x M )=c 1 4 (1,4) (2,8)
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