Econ 309-C01

Summer 2018

Assigned: 6/28/2018

Due: 7/2/2018

Homework 2

1. Near the beginning of the chapter, I gave some examples of bads. Do you

agree with them? If not, is one of us necessarily wrong? Discuss.

2. Suppose my preferences with regard to hamburger and pens are as shown.

Options Hamburgers (pounds/year) Pens/year Utility (utiles/year)

a. What is the value of a pound of hamburger to me (between points A and B )?

b. In choosing between bundles A and B, which do I prefer? Between C and D ?

c. About how much hamburger should be in E to make me indifferent between

it and D? Explain briefly.

3. Figure 3-16 shows your preferences between brandy and champagne. Which

(if any) of the bundles shown do you prefer to point A ? To which is A

preferred? Which are equivalent to A ? For which bundles can you not tell

whether they are equivalent, better, or worse than A ?

4. Answer the same questions for point B.

5. Figure 3-17 shows your indifference curves for cookies and bananas. You

have an income of $100, the price of cookies is $1, and the price of bananas is

$0.25. How many of each do you choose to consume?