Question

8.If bundle A is weakly preferred to bundle B, bundle B is strictly preferred to bundle C, and bundle C is weakly preferred to bundle A, what can we conclude?

a. The consumer is indifferent between bundles A and B

b. The consumer violates monotonicity

c. The consumer violates transitivity.

d.The consumer prefers C to B

e. None of the above

11. Consider a consumer who can buy good 1 or 2. The price of good 1 is $5 and the price for good 2 is $4. The consumer has income of 60. She buys 12 units of good 2. The consumer wants to also purchase 2 units of good 1. Which statement is true?

a. This is feasible, as the consumer is inside her budget set

b. This is outside the consumer’s budget set – it is unaffordable

c. This is affordable – the consumer would be consuming on her budget constraint

d. all of the above

e. none of the above

18. If a consumer has a utility function of U = x + 2y, which statement is true?

a. The MRS_y→x = -1/2; x and y are perfect substitutes

b. The MRS_y→x = -2; x and y are perfect substitutes

c. The MRS_y→x = -1/2; x and y are perfect complements

d. The MRS_y→x = -1; x and y are perfect substitutes

e. None of the above

Answer 1