Econ3101 - Section 006 Intermediate Microeconomics
Xavier Vinyals-Mirabent Due: Wednesday, February 1st, 2012.

Solutions to Homework 1.

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1. A consumer has preferences for two goods. Her preferences satisfy Axioms 1 through 4 as discussed in class. A v D v

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E v 5 C v

B v

0 0 5 (a) Plot and label the following bundles: A (2,10) B (6,2) C (0,4) D (8,10) E (4,6) (b) Assume A is indifferent to B (A ∼ B). On a single line, list all the bundles in descending order of preference using ( ) to denote strict preference and (∼) to denote indifference between adjacent pairs. In other words, use the form: A B C D E Answer: D E A∼B C, or D E B∼A C. 10

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2. Consider an economic agent who has preferences that are represented …show more content…

Characterize the properties of the quadrants by filling in the blanks in the following statements.

Within Quadrant III, • The M Ux is (positive/negative): negative. • The M Uy is (positive/negative): negative. • The preferences (do/don’t) don’t satisfy the axiom of non-satiation. • The preferences (do/don’t) don’t satisfy the axiom of convexity.

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Within Quadrant IV, • The M Ux is (positive/negative): positive. • The M Uy is (positive/negative): negative. • The preferences (do/don’t) don’t satisfy the axiom of non-satiation. • The preferences (do/don’t) don’t satisfy the axiom of convexity. Within Quadrant I, • The M Ux is (positive/negative): positive. • The M Uy is (positive/negative): positive. • The preferences (do/don’t) do satisfy the axiom of non-satiation. • The preferences (do/don’t) don’t satisfy the axiom of convexity. Within Quadrant II, • The M Ux is (positive/negative): positive. • The M Uy is (positive/negative): negative. • The preferences (do/don’t) don’t satisfy the axiom of non-satiation. • The preferences (do/don’t) do satisfy the axiom of convexity.