Hw-1(budget,preference,utility)1.Iftherearetwogoodswithpositivepricesandthepriceofonegoodisreduced,whileincomeandotherpricesremainconstant,thenthesizeofthebudgetsetisreduced.（F）2.Iftherearetwogoods,andifonegoodhasanegativepriceandtheotherhasapositiveprice,thentheslopeofthebudgetlinewillbepositive.（T）3.Ifpreferencesaretransitive,moreisalwayspreferredtoless.(F)4.IfsomeonehastheutilityfunctionU=1000+2min(x;y),thenxandyareperfectcomplementsforthatperson.(T)5.Aconsumerwithconvexpreferenceswhoisindifferentbetweenthebundles(1;2)and(9;6)willlikethebundle(5;4)atleastaswellaseitherofthefirsttwobundles.(T)6.Angela'sutilityfunctionisU(x1;x2)=(x1+x2)3.Herindifferencecurvesaredownward-sloping,parallelstraightlines.(T)7.TheutilityfunctionU(x1;x2)=2lnx1+3lnx2representsCobb-Douglaspreferences.(T)8.Ifshespendsallofherincomeonlemonsandtangerines,Isabellacanjustafford30lemonsand8tangerinesperday.Shecouldalsouseherentirebudgettobuy6lemonsand14tangerinesperday.Thepriceoflemonsis6guineaseach.HowmuchisIsabella'sincomeperday?(a)372guineas(b)377guineas(c)371guineas(d)376guineasAnswer:a9.Teresaspendsherentirebudgetandconsumes6unitsofxand20unitsofy.Thepriceofxistwicethepriceofy.Herincomedoublesandthepriceofydoubles,butthepriceofxstaysthesame.Ifshecontinuestobuy20unitsofy;whatisthelargestnumberofunitsofxthatshecanafford?(a)12(b)6(c)14(d)8Answer:a10.Inyear1,thepriceofgoodxwas4,thepriceofgoodywas2,andincomewas60.Inyear2,thepriceofxwas17,thepriceofgoodywas8,andincomewas60.Onagraphwithxonthehorizontalaxisandyonthevertical,thenewbudgetlineis:(a)flatterthantheoldoneandliesbelowit.(b)flatterthantheoldoneandliesaboveit.(c)steeperthantheoldoneandliesbelowit.(d)steeperthantheoldoneandliesaboveit.Answer:c11.Ifshespendsherentirebudget,Heidicanafford39peachesand12pears.Shecanalsojustafford24peachesand17pears.Thepriceofpeachesis9cents.Whatisthepriceofpearsincents?(a)37(b)3(c)12(d)27Answer:d12.IntheeconomyofMungo,discussedinyourworkbook,thereisathirdpersoncalledIke.Ikehasaredincomeof56andablueincomeof1...
