Problem Set 3
1. (MWG 3.G.14) The matrix below represents the Slustsky substitution matrix for a consumer
endowed with rational preferences and consuming three goods at the prices p1 = 1, p2 = 2, and
p3 = 6:
2
10
a
b
e
3
f
7
4 d5 .
6
4c
3
Supply the numbe
Problem Set 1
1. (MWG 3.C.1) Verify that the lexicographic ordering is complete, transitive, strongly monotone,
and strictly convex.
2. (MWG 3.C.2) Show that if u( ) is a continuous utility function representing %, then % is continuous.
3. (Similar to MWG
Problem Set 2
1. (Similar to MWG 3.C.6 and 3.D.5) The consumer utility function takes the form u(x) = [x1 +
s
x2 ]1= (0 6=
< 1) in a two-commodity world. This utility function is known as the constant
elasticity of subsitution (or CES) utility function. (
Problem Set 5
1. Consider a 2-commodity (l = 1; 2) economy composed of 2 consumers (i = 1; 2). The distribution
of initial endownments is ! 1 = (1=4; 3=4) and ! 2 = (3=4; 1=4). The consumers preferences are
represented by the following utility functions:
Microeconomic Theory I
1. Introduction
This is the first unit of the microeconomics sequel in graduate program. As master or doctoral
program students, you are supposed to pass this subject. We will deal with 1) traditional decision
theory and market equi
Chapter 1
Consumer Theory
to study consumer demand in market economy
consumer: fundamental decision unit economic agent
market economy: goods and services can be acquired at known prices
outline
introduce primitives of consumer choice: consumption set, p