Question 1

Sharon's utility function can be expressed as U(x₁, x₂)= 7x₁^0.25x₂^0.75. How much good 2 is she willing to give up to get one unit of good 1 if she currently has 10 units of good 1 and 30 units of good 2?

Accepted Answer

The answer of Sharon's utility function can be expressed as...

Question 2

Does a diminishing marginal rate of substitution imply that an individual requires increasing amounts of one good as he gives up more and more of the other good to remain at the same utility level?

Accepted Answer

The answer of Does a diminishing marginal rate of substitution...

Question 3

One of the factors influencing the increase in the size of shopping carts for the past three decades is:

Accepted Answer

The continued entrance of women into the workforce has influenced the increase in the size of shopping carts over the past three decades. This is because with more women working, there is less time for frequent shopping trips, leading to a preference for buying more items in fewer trips, necessitating larger shopping carts.

Question 4

The slope of an indifference curve reflects:

Accepted Answer

The slope of an indifference curve reflects the relative value or importance that a consumer places on one commodity compared to another. This means that it shows how much of one good a consumer is willing to give up in order to obtain more of the other good while remaining indifferent or equally satisfied. The income of a consumer, the relative price of two commodities, and the utility number associated with the utility function do not directly affect the slope of an indifference curve.

Question 5

Utility numbers provide:

Accepted Answer

The answer of Utility numbers provide:
...

Question 6

Tom currently has 100 units of x₁and 50 units of x₂, and Jan has 50 units of x₁and 100 units of x₂. If Tom's marginal rate of substitution is 10, and Jan's is 1:

Accepted Answer

The answer of Tom currently has 100 units of x₁_...

Question 7

Given the following utility function, U(x₁,x₂)= x₁+ x₂, which of the following preference statements is not true?

Accepted Answer

The answer of Given the following utility function, U(x₁,x₂)= x₁_...

Question 8

Consider four consumption bundles, denoted by A, B, C, and D. Which of the following sets of preference statements violates the transitivity assumption?

Accepted Answer

The preference statements in bundle C violate transitivity. Specifically, D is preferred to B, B is preferred to C, and C is preferred to D, which creates a cycle of preferences and violates the transitivity assumption. The other choices do not violate transitivity.

Question 9

Consider the choice between an economic bad, air pollution, and a measure of expenditure on all other goods, income. The MRS of the indifference curves in this space:

Accepted Answer

The MRS (Marginal Rate of Substitution) between income and air pollution is positive because as income increases, individuals generally desire less air pollution. Therefore, they are willing to give up some income to reduce pollution. This is reflected by the downward sloping indifference curves in this space.

Question 10

When asked if he wants another beer, Kevin says "no thanks". Is this a violation of the non- satiation assumption?

Accepted Answer

The answer of When asked if he wants another beer,...

Question 11

Explain the difference between ordinal and cardinal utility.

Accepted Answer

The answer of Explain the difference between ordinal and cardinal...

Question 12

Compute the MRS for the indifference curve x₁+ x₂= c. Is it diminishing?

Accepted Answer

The answer of Compute the MRS for the indifference curve...

Question 13

Define the Panglossian dilemma and illustrate it with an example.

Accepted Answer

The answer of Define the Panglossian dilemma and illustrate it...

Question 14

Along a standard, downward sloping, convex indifference curve the marginal rate of substitution is:

Accepted Answer

The marginal rate of substitution (MRS) decreases along a standard, downward sloping, convex indifference curve because as a consumer substitutes one good for another, the amount of the good being given up that the consumer is willing to trade for an additional unit of the other good decreases. This reflects diminishing marginal utility.

Question 15

The nonsatiation assumption implies that more is preferred to less. Can two bundles that contain different amounts of good 1 but the same amount of good 2 be on the same indifference curve?

Accepted Answer

The answer of The nonsatiation assumption implies that more is...

Question 16

Is an indifference curve defined as a set of bundles that a consumer with a given income can afford, and among which he or she is indifferent?

Accepted Answer

The answer of Is an indifference curve defined as a...

Question 17

Consider the following utility functions: i)U(x, y)= xy^1/2 ii)U(x, y)= 10xy iii)U(x, y)= 3x + 4y iv)U(x, y)= 2x + ln(y) v)U(x, y)= x³ a)Construct an indifference curve for each of these functions. b)Calculate the MRS for each of these functions. (Calculus required)

Accepted Answer

The answer of Consider the following utility functions: i)U(x, y)= xy^1/2 ii)U(x,...

Question 18

Is the indifference curve between ice cream and garbage positively sloped?

Accepted Answer

The answer of Is the indifference curve between ice cream...

Question 19

Consider the following list of statements. Each statement in the list means the same thing as one of the other statements. Identify the pairs of statements which are equivalent:
a)consumers always prefer to have more of a good;
b)consumers' preferences are complete;
c)consumers' preferences are transitive;
d)every market basket has an indifference curve associated with it;
e)indifference curves are bowed in to the origin;
f)indifference curves are downward sloping;
g)indifference curves do not cross;
h)a diminishing MRS is a characteristic of consumer preferences.

Accepted Answer

The answer of Consider the following list of statements. Each...

Question 20

The basic reason there are so many excellent substitutes for water in almost all Canadian cities is that:

Accepted Answer

The answer of The basic reason there are so many...

Quiz 2: A Theory of Preferences

Sharon's utility function can be expressed as U(x₁, x₂)= 7x₁^0.25x₂^0.75. How much good 2 is she willing to give up to get one unit of good 1 if she currently has 10 units of good 1 and 30 units of good 2?

Does a diminishing marginal rate of substitution imply that an individual requires increasing amounts of one good as he gives up more and more of the other good to remain at the same utility level?

One of the factors influencing the increase in the size of shopping carts for the past three decades is:

The slope of an indifference curve reflects:

Utility numbers provide:

Tom currently has 100 units of x₁and 50 units of x₂, and Jan has 50 units of x₁and 100 units of x₂. If Tom's marginal rate of substitution is 10, and Jan's is 1:

Given the following utility function, U(x₁,x₂) = x₁+ x₂, which of the following preference statements is not true?

Consider four consumption bundles, denoted by A, B, C, and D. Which of the following sets of preference statements violates the transitivity assumption?

Consider the choice between an economic bad, air pollution, and a measure of expenditure on all other goods, income. The MRS of the indifference curves in this space:

When asked if he wants another beer, Kevin says "no thanks". Is this a violation of the non- satiation assumption?

Explain the difference between ordinal and cardinal utility.

Compute the MRS for the indifference curve x₁+ x₂= c. Is it diminishing?

Define the Panglossian dilemma and illustrate it with an example.

Along a standard, downward sloping, convex indifference curve the marginal rate of substitution is:

The nonsatiation assumption implies that more is preferred to less. Can two bundles that contain different amounts of good 1 but the same amount of good 2 be on the same indifference curve?

Is an indifference curve defined as a set of bundles that a consumer with a given income can afford, and among which he or she is indifferent?

Consider the following utility functions: i)U(x, y)= xy^1/2 ii)U(x, y)= 10xy iii)U(x, y)= 3x + 4y iv)U(x, y)= 2x + ln(y) v)U(x, y)= x³ a)Construct an indifference curve for each of these functions. b)Calculate the MRS for each of these functions. (Calculus required)

Is the indifference curve between ice cream and garbage positively sloped?

The basic reason there are so many excellent substitutes for water in almost all Canadian cities is that:

Quiz 2: A Theory of Preferences

Sharon's utility function can be expressed as U(x1, x2)= 7x10.25x20.75. How much good 2 is she willing to give up to get one unit of good 1 if she currently has 10 units of good 1 and 30 units of good 2?

Does a diminishing marginal rate of substitution imply that an individual requires increasing amounts of one good as he gives up more and more of the other good to remain at the same utility level?

One of the factors influencing the increase in the size of shopping carts for the past three decades is:

The slope of an indifference curve reflects:

Utility numbers provide:

Tom currently has 100 units of x1 and 50 units of x2, and Jan has 50 units of x1 and 100 units of x2. If Tom's marginal rate of substitution is 10, and Jan's is 1:

Given the following utility function, U(x1,x2) = x1 + x2, which of the following preference statements is not true?

Consider four consumption bundles, denoted by A, B, C, and D. Which of the following sets of preference statements violates the transitivity assumption?

Consider the choice between an economic bad, air pollution, and a measure of expenditure on all other goods, income. The MRS of the indifference curves in this space:

When asked if he wants another beer, Kevin says "no thanks". Is this a violation of the non- satiation assumption?

Explain the difference between ordinal and cardinal utility.

Compute the MRS for the indifference curve x1 + x2 = c. Is it diminishing?

Define the Panglossian dilemma and illustrate it with an example.

Along a standard, downward sloping, convex indifference curve the marginal rate of substitution is:

The nonsatiation assumption implies that more is preferred to less. Can two bundles that contain different amounts of good 1 but the same amount of good 2 be on the same indifference curve?

Is an indifference curve defined as a set of bundles that a consumer with a given income can afford, and among which he or she is indifferent?

Consider the following utility functions: i)U(x, y)= xy1/2 ii)U(x, y)= 10xy iii)U(x, y)= 3x + 4y iv)U(x, y)= 2x + ln(y) v)U(x, y)= x3 a)Construct an indifference curve for each of these functions. b)Calculate the MRS for each of these functions. (Calculus required)

Is the indifference curve between ice cream and garbage positively sloped?

The basic reason there are so many excellent substitutes for water in almost all Canadian cities is that:

Sharon's utility function can be expressed as U(x₁, x₂)= 7x₁^0.25x₂^0.75. How much good 2 is she willing to give up to get one unit of good 1 if she currently has 10 units of good 1 and 30 units of good 2?

Tom currently has 100 units of x₁and 50 units of x₂, and Jan has 50 units of x₁and 100 units of x₂. If Tom's marginal rate of substitution is 10, and Jan's is 1:

Given the following utility function, U(x₁,x₂) = x₁+ x₂, which of the following preference statements is not true?

Compute the MRS for the indifference curve x₁+ x₂= c. Is it diminishing?

Consider the following utility functions: i)U(x, y)= xy^1/2 ii)U(x, y)= 10xy iii)U(x, y)= 3x + 4y iv)U(x, y)= 2x + ln(y) v)U(x, y)= x³ a)Construct an indifference curve for each of these functions. b)Calculate the MRS for each of these functions. (Calculus required)