Exercise 1.2.3 a) Suppose there are two goods in a market, and that you buy ql of the first and q2 of the second. Give a mathematical expression for the total cost. b) Now, use the answer to a) to show that the marginal rate of transformation, MRT, is equal to the slope of the budget line. 1.3 Utility Maximization Exercise 1.3.1 a) Explain briefly, what utility maximization is. b) What is a utility function? c) What is the criterion that a consumer maximizes her utility? Give the answer in the form of a mathematical expression. Exercise 1.3.2 a) Suppose a consumer has two goods from which to choose. Draw a graph, with quantities on the X- and Y-axes, that illustrates how she can choose, given prices and income. b) Also, illustrate a few indifference curves in the graph. c) Show how the consumer maximizes her utility and where in the graph this occurs. d) Can you give an example of a situation in which the consumer will find more than one point where she maximizes her utility? Think about what the indifference curves must look like to make this possible. Exercise 1.3.3 Look at Figure E.1.I again. Suppose the consumer maximizes her utility at A, and that the price of good 2 is 100. What is the price of good 1? How large is the consumer's income?IL SHORT PROBLEMS Short Problem #1 (10 pts) Which textbook is likely to be worth more: Principles of Microeconomics by Hubbard and O'Brien (used in EC215 class) or Advanced Microeconomics Theory (used in EC 420, an upper level economies class)? Demand for Principles of Microeconomics textbook is much higher than demand for an advanced microeconomics book, since many business students take an Introductory course, but few students major in economics. Price of Advanced Microcoonomics textbook: $271.55 (Print only, no digital product) Price of Principles of Microeconomics textbook: 249.14 (Print only, no digital product) In the space below, use a demand and supply diagram to explain why Advanced Microeconomics textbook, a relatively less popular book, sells for a much higher market price than the Principles of Microeconomics textbook. Make sure that you have labeled everything-Compared to eukaryotes, prokaryotes (bacteria and archaea)... O A Can carry out a vastly greater range of biochemical reactions. D B. Have many more described species O C. Have a much simpler cellular structure, lacking organelles like a nucleus, mitochondria, etc. O D. Are far more abundant in the biosphereQuestion 8 Pure capitalism and a pure command system are two economic systems where the problem of scarcity does not exist. two different ways of answering the basic economic questions. the only two ways of answering the basic economic questions. two terms describing the same method of answering the basic economic questions. the most efficient ways of answering the basic economic questions,Label each entry in the list as dealing with a microeconomic topic or a macroeconomic topic. Macroeconomic Motor vehicle production in China is growing by 10 percent a year. Microeconomic Coffee prices rocket. Macroeconomic Globalization has reduced African poverty. Microeconomic The government must cut its budget deficit. Microeconomic Apple sells 20 million iPhone 6 a month
