Econ 291
Answers to Homework 2
The first two problems ask you to set up an Excel sheet. You will turn in this portion of the
assignment as an Excel file. Go to the Assignments page on Canvas and upload your file.
1. a. Set up and Excel sheet for the follo
Econ 291
Answers to Homework 1
1. Your budget is such that if you spend your entire income, you can afford either 4 units of good
x or 6 units of good y or 12 units of x and 2 units of y.
a. Draw the budget line.
b. Write a budget equation that gives you
Econ 291
Homework Three
Due Sept. 29
1. The utility function is U = x2y3. The price of good y is $2.
a. Find the demand curve for good x if the consumers income is $60.
b. Find the Engel curve if the price of good x is 4.
2. The utility function is U = x
Econ 291
Homework Four
Due Oct. 10
1. In Homework 3 question 3 we derived for a case of perfect complements the demand curve
60
x=
.
px +6
Find the price elasticity of demand, as a function of px, for this demand curve.
2. Suppose the demand for corn is Q
Econ 291
Answers to Homework Four
1. In Homework 3 question 3 we derived for a case of perfect complements the demand curve
.
Find the price elasticity of demand, as a function of px, for this demand curve.
e = /dP P/Q = 1(60)(px+6)2 (px/Q)
= 60(px+6)2(px
Econ 291
Quiz Three
October 13, 2014 Name 9N5 (#6165
1. The demand curve is: Q = 20P_2. What is the elasticity of demand?
Q t a?
2. Who portion of the tax does the buyer pay if the demand curve is perfectly inelastic? S HEW
/ .
it] 8 {we Mat-the) 1La><
Econ 291
Homework Five
Due Oct. 22
The first two questions are Excel questions; save your answers in an Excel file and submit the
file on Canvas. The last three questions should be turned in on paper.
1. Draw a Surface graph showing output as a function o
Econ 291
Quiz One
Sept. 10, 2014
Name
1. Based on the indifference curve graph below, say whether each statement is true or false.
L)
l
X
a. Point A is preferred to point B. True £3,le
b. Point B is preferred to point C. True 25"}iia!:5'eh_,-}
/
c. The
Econ 291
Quiz Four
Oct. 29, 2014
Name _
1. Acme, Inc. has the production function Q = 5L0.5K0.5. The price of labor is w=9 and the price
of capital is r=16.
a. Find two points on isoquant for Q = 60.
b. Draw isocost curve for cost of $720. Label the axes
Econ 291
Answers to Homework Three
1. The utility function is U = x2y3. The price of good y is $2.
a. Find the demand curve for good x if the consumers income is $60.
MRS =
=
=
4y = 3pxx
pxx + 2y = 60
pxx + (3/2)pxx = 60
(5/2)pxx = 60
pxx = 24
-> x =
b. F
Econ 291
Answers to Homework Six
1. A perfectly competitive firm has the cost function
C(q) = 300 + 250q 20q2 + q3
a. Write the functions for the firms Average Cost, Average Variable Cost, and Marginal Cost
functions.
AC = 300/q + 250 20q + q2
AVC = 250 2
Econ 291
Homework 2
Due Sept. 15
The first two problems ask you to set up an Excel sheet. You will turn in this portion of the
assignment as an Excel file. Go to the Assignments page on Canvas and upload your file.
1. a. Set up and Excel sheet for the fol
Econ 291
Homework 1
Due Sept. 8
1. Your budget is such that if you spend your entire income, you can afford either 4 units of
good x or 6 units of good y or 12 units of x and 2 units of y.
a. Draw the budget line.
b. Write a budget equation that gives you
Cam Stewart
Econ 291
1.4.5 Exercises
1. By scrolling down and observing the X1 data as p1 increased, I was able to see the curve
behave as a Giffen good from about P1=.69 to P1=1.1. This is the range of the curve that had a
positive slope.
2. With the fol
Cam Stewart
Econ 291
1.4.6 Q and A
1. When p1=5, our utility, X1, and X2 are as follows.
Goal
max
Utility
93.8888888
9
Endogenous Variables
x1
13
7.22222222
x2
2
When we increase P1 by 1, we get
Goal
max
Utility
78.2407407
4
Endogenous Variables
x1
10.833
Cam Stewart
Econ 291
1.4.1 Exercises
1.
2. The slope is different because when we changed the value of p1 (ceteris paribus), this changed
the optimal value of x1. So the change in x1* over the change in m(which is the slope) is
different.
3.
4. Elasticity
Cam Stewart
Econ 291
1.3.3 Q and A
1.
2.
3. The consumer has the highest Utility when she sells no food stamps. Also, the slope of the
budget constraint when x1 is less than x1-bar is -.2 which is greater than the MRS of -.278 so the
consumer does not sel
Cam Stewart
Econ 291
Excersises-2/3/14
1. U=10-0.03(10^2)+1=8
2. 8=20-.03(400)+y
y=0. MRS=dy/dx=1-0/10-20= -1/10
3. MRS= -du/dx/du/dy= -[1-.06x/1](x=10,y=1)= -.4
4. The two methods are measuring different size changes.
5. The derivative method is better b
Cam Stewart
Econ 291
Q and A-Optimal Choice
1. X1=25, X2=16.667, which yields a maximum utility of 416.667
2.
Goal
max
Utility
6.03228
7
Endogenous
Variables
x1
x2
Exogenous
Variables
p1
p2
m
c
d
Constrain
t
25
16.6666
7
2
3
100
1
1
0
3. X1 and X2 remaine
Cam Stewart
ECON 291
Chapter 1.2.1 Excersises
1. Since the indifference curve is flat everywhere, and the slope is constantly zero, we can
infer that the MRS at any point will be zero.
2.
3. Figure 1.2.1.8 does not follow the transitivity axiom of indiffe
Cam Stewart
Econ 291
1.3.4 Q and A
1.
Goal
max
Utility
2500
Endogen
ous
Variables
x1
50
x2
50
cigarettes
Other
Goods
Exogeno
us
Variables
p1
2
p2
m
1
100
c
1
d
1
Q Tax
$
(1.00)
-50
Goal
max
Utility
Endogen
ous
Variables
x1
x2
Exogeno
price of
x1
price of
Objective
Max utility
36.33333
Exogenous variables
x
y
0.111111
35.66667
Endogenous variables
Px
Py
M
Constraint
Budget
12
4
144
-2E-010
Objective
Max utility
30.33333
Exogenous variables
x
y
0.111111
29.66667
Endogenous variables
Px
Py
M
Constraint
Budge
Exam 2 Econ 291 Midterm 2
Name: A N S L) E ES .
Answer all questions, use graphs where appropriate, and be clear and complete in your explanations.
l. The production function is y=min{4L, K}. The price of labor is 2 and the price of capital is 14. Find
th