Economics Intermediate Microeconomics Exam

Case Western Reserve University Department of Economics ECON 309 – Intermediate Microeconomics Fall 2023 Homework #1 Chapter 3 Submit on Canvas by September 21 Names: . . . . Please submit your answers AND SHOW YOUR WORK 1 Total points ____ out of 10. 1. (1 point) Indifference curves a. may sometimes intersect b. represent different consumption bundles which lead to the same level of utility c. show goods that consumers do not care about d. shift when prices change 2. (1 point) If bundles of goods A and B lie on the same indifference curve, one can assume the individual a. prefers bundle A to bundle B b. prefers bundle B to bundle A c. enjoys bundle A and B equally d. bundle A contains the same goods as bundle B 3. (1 point) Assume that an individual has the following utility function: U(x, y) = 4x + 2y. With this utility function, the bundle (3, 2) provides the same utility as the bundle a. (2, 3) b. (2, 4) c. (2, 5) d. (3, 3) 4. (1 point) Assume that an individual has the following utility function: U(x, y) = 4x + 2y. For this utility function, the MRS a. depends on the values of x and y b. is always 0 c. is always 2 d. is always 4 5. (1 point) Which of these utility functions represent the same preferences as (𝑥, 𝑦) = √𝑥𝑦 ? a. 𝑈(𝑥, 𝑦) = 10√𝑥𝑦 b. 𝑈(𝑥, 𝑦) = 𝑥𝑦 c. 𝑈(𝑥, 𝑦) = ln 𝑥 + ln 𝑦 d. All of the above represent the same preferences 2 6. (1 point) If utility is given by 𝑈(𝑥, 𝑦) = √𝑥𝑦, then the person’s MRS at the point x = 5, y = 2 is given by a. 0.4 b. 1.0 c. 2.5 d. 5.0 7. (1 point) Which of the following utility functions best represents the idea that two goods, x and y, are perfect complements? a. 𝑈(𝑥, 𝑦) = 10√𝑥𝑦 b. 𝑈(𝑥, 𝑦) = 𝑥 + 𝑦 c. 𝑈(𝑥, 𝑦) = |𝑥 − 𝑦| d. 𝑈(𝑥, 𝑦) = min⁡(𝑥, 𝑦) 8. (1 point) If utility is given by U(x, y) = min(x, 3y) then the bundle (3, 2) provides the same utility as the bundle a. (1, 3) b. (2, 3) c. (4, 1) d. (4, 2) 9. (1 point) Which of the following utility functions would not be consistent with the notion that x and y are both “goods” with positive marginal utilities? a. 𝑈(𝑥, 𝑦) = 𝑥 2 𝑦 b. 𝑈(𝑥, 𝑦) = 𝑥 + 𝑦 c. 𝑈(𝑥, 𝑦) = 𝑥√𝑦 d. 𝑈(𝑥, 𝑦) = 𝑥/𝑦 10. (1 point) Suppose that at current consumption levels an individual’s marginal utility of consuming an extra hot dog is 10 whereas the marginal utility of consuming an extra soft drink is 2. Then the MRS (of soft drinks for hot dogs) – that is, the number of hot dogs the individual is willing to give up to get one more soft drink – is a. 5 b. 2 c. 1/2 d. 1/5 3