1)Suppose that a consumer's preferences are well behaved in that properties 4-1 to 4-4 are satisfied and the initial equilibrium consumption bundle consists of 100 units of X and 50 units of Y. If PX decreases such that the new equilibrium consumption bundle is 150 units of X and 75 units of Y, then goods X and Y are:

complements.

substitutes.

inferior goods.

unrelated.

2)Suppose a manager views both quantity and profit as "goods." Such a manager will then have an indifference curve that:

is tangent to the profit curve somewhere between quantities of 0 and 2.5.

is tangent to the profit curve somewhere between quantities of 2.5 and 5.

intersects the profit curve at a quantity exactly equal to 2.5.

intersects the profit curve at a quantity exactly equal to 5.

3)Suppose a manager's preferences depend only on profit. Such a manager will then have an indifference curve that

is tangent to the profit curve somewhere between quantities of 0 and 2.5.

is tangent to the profit curve somewhere between quantities of 2.5 and 5.

is tangent to the profit curve at a quantity exactly equal to 2.5.

intersects the profit curve at a quantity exactly equal to 5.

4)Suppose that a consumer's preferences are well behaved in that properties 4-1 to 4-4 are satisfied and the initial equilibrium consumption bundle consists of 10 units of X and 25 units of Y. If P_Yincreases such that the new equilibrium consumption bundle is 15 units of X and 10 units of Y, then goods X and Y are:

complements.

substitutes.

normal goods.

unrelated.

5)Suppose we are given that the value of a particular utility function is a constant. That is, U(X,Y) = c. Then, the total derivative of this relation is:

6)Suppose the following Lagrangian is formed to maximize a consumer's utility subject to her budget constraint:

The first-order conditions for this problem imply:

MRS = 10.

P_X/P_Y= 10.

All of the statements associated with this question are correct.

7) Suppose a consumer has M = $200 to spend on two goods, X and Y. If the per-unit prices of X and Y are respectively given by P_X= $2 and P_Y= $4, then utility maximization subject to a budget constraint can be found from which of the following Lagrangians?

8)What is the maximum amount of good X that can be purchased if X and Y are the only two goods available for purchase and Px = $10, Py = $20, Y = 5, and M = 400?

80

20

40

30

9)

What is the maximum amount of good X that can be purchased if X and Y are the only two goods available for purchase and Px = $10, Py = $20, Y = 0, and M = 400?

0

20

40

30

10)

What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and Px = $10, Py = $20, X = 20, and M = 400?

10

20

5

0