1.Suppose we know that for a consumer bundle A is at least as good as bundle B. Then, we can conclude that if the consumer has to choose between bundle A and bundle B, she will necessarily choose bundle A.

a. True

b. False

2. Suppose you observe me choosing bundle A=(4,3) over bundle B=(4,5). This suggests that my tastes do not satisfy the assumption of monotonicity.

a. True

b. False

3. Suppose you observe me choosing bundle A over bundle B on a given occasion, then you observe me choosing bundle B over bundle C on a second occasion, and you observe me choosing bundle C over bundle A on a third occasion. Based on this information, you can conclude that my preferences are not rational.

a. True

b. False

4. Consider the following bundles: A=(4,8), B=(8,4), and C=(6,6). Suppose you know that my tastes satisfy the convexity assumption. Then you can conclude that for me bundle C is better than bundles A and B.

a. True

b. False

5. An indifference curve is a full description of the tastes of a consumer.

a. True

b. False

6. If the tastes of a consumer satisfy the assumption of transitivity, her indifference curves must:

a. Not cross the axes

b. Have a positive slope

c. Not cross one another

d. Bend towards the origin

e. all of the above

7. If the tastes of a consumer satisfy the assumption of monotonicity, then the indifference curves of this consumer must be downward sloping.

a. True

b. False

8. Suppose two indifference curves intersect. Then, it is true that:

a. they may be the indifference curves of two consumers with different tastes

b. they may be the indifference curves of a consumer whose tastes violate the assumption of transitivity

c. both a and b

d. indifference curves cannot intersect.

13. Suppose Miles' utility function is such that u(A)=30 and u(B)=40, while Janis' utility function is such that u(A)=30 and u(B)=32. Based on this information, which one of the following statements is correct?

a. Miles and Janis have different tastes over bundles A and B

b. Miles and Janis have the same tastes over bundles A and B

c. Miles likes bundle B more than Janis does

d. Miles likes bundle B less than Janis does

e. None of the above

14. Suppose the tastes of a consumer are described by the utility function u(x_1, x₂) = x₁^1/4x₂^1/4. Consider bundles A=(1,16) and B=(16,1). Which of the following statements best describes the consumer's preferences over bundles A and B?

a. The consumer strictly prefers A to B

b. The consumer strictly prefers B to A

c. The consumer is indifferent between A and B

d. For the consumer, A is at least as good as B

e. For the consumer, B is at least as good as A

15. Suppose I strictly prefer bundle A to bundle B, and bundle B to bundle C. You further know that my tastes are rational. Then, a utility function u that represents my tastes must satisfy:

a. u(A) ~ u(C)

b. u(B) u(A)

c. u(A) > u(C)

d. u(B) > u(A)

e. None of the above

16. Consider the utility function u(x₁ , x₂ ) = x₁x₂ . Tastes represented by this utility function:

a. violate transitivity

b. violate monotonicity

c. violate convexity

d. satisfy all the 5 assumptions that we introduced about tastes

e. satisfy only completeness and transitivity

17. Consider again the utility function u(x₁ , x₂ ) = x₁x₂ . The map of indifference curves associated with this utility function is such that:

a. indifference curves are downward sloping

b. indifference curves are bent towards the origin

c. indifference curves never cross one another

d. indifference curves never cross the axes

e. all the above

18. Consider the utility function (₁, ₂) = 4₁₂. Which of the following mathematical expressions represents an indifference curve associated with this function?

a. ₂ = 4₁

b. x₂ =1/x₁

c. ₂ = 4 ₁

d. ₂ = 4 + ₁

e. None of the above

19. Suppose you find that MU₁( x₁,x₂)=2x₂ and MU₂( x₁,x₂)=2x₁. What is the rate at which the consumer is willing to trade good 2 for good 1 at bundle (2,4)? (Note: enter a positive number, i.e. enter the quantity of good 2 that the consumer is willing to give up for an additionalmarginalunit of good 1.)

20. Suppose you find that the expressions of the marginal utilities for a consumer are given by MU₁( x₁,x₂)=1 and MU₂( x₁,x₂)=3. Then you can conclude that:

a. This consumer has Cobb-Douglas tastes

b. For this consumer good 1 and good 2 are perfect complements

c. For this consumer good 1 and good 2 are perfect substitutes

d. None of the above

21. Suppose a consumer is always willing to give up 5 units of good 2 for an additional unit of good 1. For this consumer:

a. Good 1 and good 2 are perfect complements

b. Good 1 and good 2 are perfect substitutes

c. Good 1 and good 2 are both essential goods

d. None of the above

22. Suppose a consumer is always willing to give up 4 units of good 2 for an additional unit of good 1. Which of the following utility functions represents the tastes of this consumer?

a. u(x₁,x₂ ) = min{4x₁ ,x₂ }

b. u(x₁,x₂ ) = min{x₁,4x₂ }

c. u(x₁,x₂ ) = x₁ + 4x₂

d. u(x₁,x₂ ) = 4x₁ + x₂

e. None of the above

25. Consider the following utility functions: u₁(x₁ ,x₂ ) = x₁ + x₂ and u₂(x₁,x₂ ) = 3x₁ + 3x₂ . Do they represent the same tastes?

a. Yes

b. No

c. There is not enough information to answer