QUESTION 1 Steph likes basketballs and sneakers. He has welldened indifference curves, which are bowed towards the origin and do not intersect either axis. The price of basketballs is $30 and the price of sneakers is $90. If the Steph's marginal rate of substitution of sneakers for basketballs (marginal utility of sneakers l marginal utility of basketballs) is 2, is he consuming an optimal bundle? If not, should he buy more basketballs or sneakers? 0 Yes O No. He should consume more basketballs. O No. He should consume more sneakers. O I would require more information. QUESTION 2 An average Chicagoan consumes only two goods: hot dogs (H) and pizza (P). Since they considerthem to be perfect substitutes, their utility function is given by U (H, P) = H + 4P. The price of a hot dog is $3, and the price of a pizza is $6. Assume that the average wage of people in the city is $300. a. What is the budget line for an average consumer in Chicago? @ H+2P=100 O P+2H=100 O H+4P=300 O4H+P=300 10 poil QUESTION 3 An average Chicagoan consumes only two goods: hot dogs (H) and pizza (P). Since they consider them to be perfect substitutes, their utility function is given by U (H, P) = H + 4P. The price of a hot dog is $3, and the price of a pizza is $6. Assume that the average wage of people in the city is $300. b. What is the slope of the budget line if hot dogs are on the x-axis? 0 1:2 0 2 O -2 412 QUESTION 4 An average Chicagoan consumes only two goods: hot dogs (H) and pizza (P). Since they consider them to be perfect substitutes, their utility function is given by U (H, P) = H + 4P. The price of a hot dog is $3, and the price of a pizza is $6. Assume that the average wage of people in the city is $300. c. If the average consumer in Chicago is a utility maximizer, what is the optimal consumption bundle? O H = 40; P = 50 O H = 100; P = 0 O P = 50; H = 0 Q There is no optimal bundle QUESTION 5 We surveyed UIC dorms and asked students about their preferences between three bundles: A, B, and 0. Students preferred A to C but were indifferent between A or B. Therefore, 0 B is on a lower indifference curve than A A is on a higher indifference curve than C but it is not possible to determine the relative position of B with O respect to C O A and C are on the same indifference curve 0 Both A and B are on a higher indifference curve than C QUESTION 6 It is 2050 and people only consume two goods: Musk NFTs (N) and travel tickets to planet Mars {M}. If N is an inferior good, what can you say about M? Q It is a normal good 0 It is an inferior good 0 It is a Giffin good 0 We would need more information on prices and income