Reference no: EM13376069
1. In Problem 1, Charlie has a utility function U(xA, xB) = xAxB, the price of apples is $1, and the price of bananas is $2. If Charlie's income were $320, how many units of bananas would he consume if he chose the bundle that maximized his utility subject to his budget constraint?
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a.
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80
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b.
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40
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c.
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160
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d.
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16
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e.
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240
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2. Charlie's utility function is U(xA, xB) = xAxB. If Charlie's income were $40, the price of apples were $2, and the price of bananas were $5, how many apples would there be in the best bundle that Charlie could afford?
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a.
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20
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b.
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6
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c.
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4
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d.
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5
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e.
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10
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3. In Problem 2, Clara's utility function is U(X, Y) = (X + 2)(Y + 1). If Clara's marginal rate of substitution is -5 and she is consuming 15 units of good X, how many units of good Y is she consuming?
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a.
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5
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b.
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85
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c.
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20
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d.
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84
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e.
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11
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4. In Problem 3, Ambrose's utility is U(x1, x2) = 4x1/2 + x2. If the price of nuts (good 1) is $1, the price of berries (good 2) is $7, and his income is $238, how many units of nuts will Ambrose choose?
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a.
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6
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b.
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196
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c.
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392
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d.
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199
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e.
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98
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5. Ambrose's utility function is 4x1/2 + x2.. If the price of nuts (good 1) is $1, the price of berries (good 2) is $6, and his income is $198, how many units of berries will Ambrose choose?
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a.
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145
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b.
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9
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c.
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18
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d.
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8
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e.
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12
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6. In Problem 6, Elmer's utility function is U(x, y) = min{x, y2}. If the price of x is $20, the price of y is $20, and Elmer chooses to consume 8 units of y, what must Elmer's income be?
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a.
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$2,880
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b.
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$320
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c.
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$1,540
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d.
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$1,440
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e.
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There is not enough information to tell.
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