Question 1

Robinson Crusoe has exactly 8 hours per day to spend gathering coconuts or catching fish.He can catch 2 fish per hour or he can pick 8 coconuts per hour.His utility function is U(F, C) = FC, where F is his consumption of fish and C is his consumption of coconuts.If he allocates his time in the best possible way between catching fish and picking coconuts, his consumption will be the same as it would be if he could buy fish and coconuts in a competitive market where the price of coconuts is $1, his income is

Accepted Answer

A)  $64 and the price of fish is $4.
B)  $64 and the price of fish is $.50.
C)  $16 and the price of fish is $2.
D)  $80 and the price of fish is $2.
E)  $40 and the price of fish is $.50.F) A) and D)
G) All of the above

Question 2

Every consumer has a red-money income and a blue-money income and each commodity has a red price and a blue price.You can buy a good by paying for it either with blue money at the blue price or with red money at the red price.Harold has 12 units of red money and 10 units of blue money to spend.The red price of ambrosia is 1 and the blue price of ambrosia is 2.The red price of bubble gum is 1 and the blue price of bubble gum is 1.If ambrosia is on the horizontal axis, and bubble gum on the vertical axis, then Harold's budget set is bounded by

Accepted Answer

A)  two line segments, one running from (0, 22) to (12, 10) and another running from (12, 10) to (17, 0) .
B)  two line segments one running from (0, 22) to (5, 12) and the other running from (5, 12) to (17, 0) .
C)  two line segments, one running from (0, 15) to (12, 10) and the other running from (12, 10) to (24, 0) .
D)  a vertical line segment and a horizontal line segment, intersecting at (12, 10) .
E)  a vertical line segment and a horizontal line segment, intersecting at (5, 12) .F) All of the above
G) A) and E)

Question 3

Every consumer has a red-money income and a blue-money income and each commodity has a red price and a blue price.You can buy a good by paying for it either with blue money at the blue price or with red money at the red price.Harold has 27 units of red money and 40 units of blue money to spend.The red price of ambrosia is 3 and the blue price of ambrosia is 8.The red price of bubble gum is 1 and the blue price of bubble gum is 2.If ambrosia is on the horizontal axis, and bubble gum on the vertical axis, then Harold's budget set is bounded by

Accepted Answer

A)  two line segments one running from (0, 47) to (5, 27) and the other running from (5, 27) to (14, 0) .
B)  two line segments, one running from (0, 47) to (9, 20) and another running from (9, 20) to (14, 0) .
C)  a vertical line segment and a horizontal line segment, intersecting at (9, 20) .
D)  two line segments, one running from (0, 25) to (9, 20) and the other running from (9, 20) to (36, 0) .
E)  a vertical line segment and a horizontal line segment, intersecting at (5, 27) .F) A) and B)
G) A) and C)

Question 4

Every consumer has a red-money income and a blue-money income and each commodity has a red price and a blue price.You can buy a good by paying for it either with blue money at the blue price or with red money at the red price.Harold has 40 units of red money and 35 units of blue money to spend.The red price of ambrosia is 4 and the blue price of ambrosia is 5.The red price of bubble gum is 1 and the blue price of bubble gum is 1.If ambrosia is on the horizontal axis, and bubble gum on the vertical axis, then Harold's budget set is bounded by

Accepted Answer

A)  two line segments, one running from (0, 75) to (10, 35) and another running from (10, 35) to (17, 0) .
B)  a vertical line segment and a horizontal line segment, intersecting at (10, 35) .
C)  two line segments one running from (0, 75) to (7, 40) and the other running from (7, 40) to (17, 0) .
D)  two line segments, one running from (0, 42) to (10, 35) and the other running from (10, 35) to (50, 0) .
E)  a vertical line segment and a horizontal line segment, intersecting at (7, 40) .F) None of the above
G) C) and D)

Question 5

On a certain island there are only two goods, wheat and milk.The only scarce resource is land.There are 1,000 acres of land.An acre of land will produce either 7 units of milk or 37 units of wheat.Some citizens have lots of land; some have just a little bit.The citizens of the island all have utility functions of the form U(M, W) = MW.At every Pareto optimal allocation,

Accepted Answer

A)  total milk production is 3,500 units.
B)  the number of units of milk produced equals the number of units of wheat produced.
C)  every consumer's marginal rate of substitution between milk and wheat is -1.
D)  all citizens consume the same commodity bundle.
E)  None of the above is true at every Pareto optimal allocation.F) C) and E)
G) All of the above

Exam 31: Production-Part B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Exam 31: Production-Part B

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified