Econ 306
Professor Coughlin

Homework 6

I. Questions 1-2 are T/F and 3-4 are multiple choice. (1 point each)

II. Please complete the homework 6 problems on the Aplia Website.  (2 points each)

1. If a consumer does not have convex preferences, then a point of tangency between her indifference curve and her budget line must be an optimal bundle.

2. A consumer's utility function is U(x,y)=(x+6)(y+2). If the consumer's consumption of both x and y are doubled, then the consumer's marginal rate of substitution of y for x remains constant.

3. Charlie has the utility function U(x_A,x_B)=x_Ax_B where x_A denotes number of apples he has and x_B denotes of number of bananas he has. If his income is $80, the price of apples is $4 per apple and the price of bananas is $6 per banana, how many apples are there in the best bundle that Charlie can afford?

a) 10
b) 12
c) 8
d) 9
e) 5

4. A consumer's utility function is U(x,y)=y+54x-2x². Her income is $166. If the price of x is $38 and the price of y is $1, how many units of good y will the consumer demand?

a) 10
b) 14
c) 15
d) 0
e) 11