Review session for Midterm #1

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Jelly42U 11 2U 2Peanut Butterb) I like peanut butter, but neither like nor dislike jelly.JellyU 1 U 2Peanut Butterc) I like peanut butter, but dislike jelly.JellyU 1U 2Peanut Butterd) I like peanut butter and jelly, but I only want 2 ounces of peanut butter for every ounce of jelly.4
JellyU 1U 22124Peanut Butter3.15. Consider the utility function U(x,y) = 3x + y, with MU x = 3 amd MU y = 1.a) Is the assumption that more is better satisfied for both goods?2. Yes, the “more is better” assumption is satisfied for both goods since bothmarginal utilities are always positive. As you add more of either x or y, the total utilityincreases.b) Does the marginal utility of x diminish, remain constant, or increase as the consumer buys more of x?Explain.The marginal utility of x remains constant at 3 for all values of x. The MU x equation is simply aconstant of 3, so the change in x or y doesn’t change MU x .c) What is MRS x,y ?b) MRS 3 (because MU x /MU y =3/1=3)x, y=d) Is the MRS diminishing, constant, or increasing as the consumer substitutes x for y along anindifference curve?TheMRS ,remains constant moving along the indifference curve (look at above equation).x ye) On a graph with x on the horizontal axis and y on the vertical axis, draw a typical indifference curve (itneed not be exactly to scale, but it needs to reflect accurately whether there is a diminishing MRS x,y ).Also indicate on your graph whether the indifference curve will intersect either or both axis. Label thecurve U 1 .5
Page 1 and 2: EconS 301 ‐ REVIEW EXERCISES FOR
Page 3: dQ = 10000 − 100P + 99P + 10000
Page 7 and 8: Y450400350300250200150100500U 2U 10
Page 9 and 10: 80Clothing706050403020100U=72U=360
Page 11 and 12: y(10,6)(20,12)(5,3)4.7. Helen’s p
Page 13 and 14: all of his regular income on hambur
Page 15 and 16: ) Calculate his income and substitu
Page 17 and 18: c) Determine the numerical size of
Page 19 and 20: 5.28 Consider Noah’s preference f
Page 21 and 22: AP and MP with K=12001000000500000A
Page 23 and 24: Q = min(aK,bL)= min(λaK,λbL)= λm

Review session for Midterm #1

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