Question
For the next three questions, Qin has the utility function U(x 1 , x 2 ) = x 1 + x 1 x 2 ,
For the next three questions, Qin has the utility function U(x1, x2) = x1+ x1x2, where x1is her consumption of good 1 and x2is her consumption of good 2. The price of good 1 is p1, the price of good 2 is p2, and her income is M.
Q1. Which pair of bundles (x1, x2) are both on the same indifference curve?
a. (3, 8) and (2, 10)
b. (1, 9) and (5, 1)
c. (2, 2) and (4, 1)
d. (5, 3) and (1, 10)
e. (3, 3) and (6, 2)
Q2. Setting the marginal rate of substitution equal to the price ratio yields this equation:
p1/p2= (1+x2)/(A+x1)
where A is a number. What is A?
Q3. Suppose p1= 11, p2= 3 and M = 63. What quantity of good 2 will Qin demand?
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