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Fall 2021 - ECON11-2 - SURRO
Question 1
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Question 2
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Question 3
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A consumer has an income of 100, the price of good x is 2 and the price of good y is 4. When the consumer consumes x=10, y=20, their MRS
is 2. When the consumer consumes x=30, y=10, their MRS is 1/8. If the consumer has strictly convex preferences, which of the following could
be their optimal choice of x and y?
a. x=6, y=22
b. x=40, y=5
c. x=16, y=17
d. x=30, y=30
A consumer has an MRS equal to 1/2 at any quantity of x and y. Which of the following trades would they be willing to accept? 
a. Give up 1 unit of y, receive 1 unit of x
b. Give up 3 units of x, receive 2 units of y
c. Give up 3 units of y, receive 2 units of x
d. Give up 4 units of x, receive 1 unit of y
We know that a consumer gets 8 utility from eating one slice of cheese pizza and 10 utility from eating one slice of pepperoni pizza. Which of
the following is true based on this information?
a. If the consumer has enough money to buy one slice of pizza and all slices cost the same amount, they will buy the slice with
pepperoni
b. The consumer prefers 2 slices of cheese pizza to one slice of pepperoni pizza
c. The consumer gets 2 units of utility from consuming pepperoni on its own
d. All of the above are true
e. None of the above are true
Question 4
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Question 5
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Carl's preferences over pretzels (P) and chips (C) can be represented by the utility function . Denise's preferences
over the same two goods can be represented by . Which of the following is NOT necessarily true?
a. If Carl and Denise both consume 2 bags of potato chips and 2 bags of pretzels, Denise will be happier than Carl
b. Carl and Denise have the same MRS
c. Carl and Denise will buy the same proportion of pretzels to chips (P/C) if they maximize utility
d. Carl and Denise both have homothetic preferences
U(C,P ) = ln(C)+ ln(P )
U(C,P ) = CP
Which of the following utility functions would never have a corner solution as the optimal choice of the consumer
a.
b.
c.
d.
U(x, y) = +x
3
y
2
U(x, y) = 3x+4y
U(x, y) = +x
1/3
y
2/3
U(x, y) = ln(x)+ y
Question 6
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Question 7
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Question 8
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A consumer has utility function . The consumer has income I=120, the price of x is 2 and the price of y is 3. What is this
consumer's optimal consumption of x?
a. 12
b. 24
c. 0
d. 60
U(x, y) = 4 + 6x
2
y
2
Which of the following utility functions is homothetic?
a.
b.
c.
d.
U(x, y) = ln(2+ x)+ ln(y)
U(x, y) = 3( + +2)x
1/2
y
1/2
U(x, y) = + yx
1/2
y
1/2
U(x, y) = 2xy+ x
A consumer has a utility function over chocolate (C) and licorice (L) given by . Which of the following accurately
describes this consumer's preferences?
a. The consumer is indifferent between 2 chocolates or 1 licorice
b. The consumer gets twice as much utility from licorice as from chocolate
c. Both of the above are true
d. None of the above are true
U(C,L) = 2C +L
Question 9
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Question 10
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A consumer gets utility from pizzas that include a base (B) and toppings (T). They only get utility from a pizza that includes one base and 3
toppings. Which of the following could represent this consumer's preference?
a.
b.
c.
d.
U(B,T ) = min(3B,T )
U(B,T ) = B+3T
U(B,T ) = 3B+T
U(B,T ) = min(B, 3T )
A consumer has utility function . What is the least the consumer can spend to reach 12 utility when and ?
a. 8
b. 12
c. 6
d. 9
U(x, y) = 3x+4y = 2p
x
= 3p
y
Question 11
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Question 12
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Question 13
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Which of the following expressions represents the expenditure function for a consumer with utility function ? 
a.
b.
c.
d.
U(x, y) = min(2x, 5y)
E = 2 +5p
x
p
y
E =min(2 , 5 )
p
x
p
y
E = (2 + 5 )U
¯
p
x
p
y
E = ( + )U
¯
p
x
2
p
y
5
The expenditure function for some utility function is given by . Which of the following is the indirect utility function
that comes from the same utility function?
a.
b.
c.
d.
A consumer with strictly convex preferences has Hicksian demands for x and y given by x=10, y=5 when and and . If
the price of x increases to 3, how much will the consumer have to spend total to keep at the new prices?
a. Exactly 50
b. Less than 40
c. Between 40 and 50
d. More than 50
= 2p
x
= 4p
y
= 20U
¯
= 20U
¯
Question 14
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Question 15
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When a consumer is maximizing their utility given an income of 100 and they consume x=40 and y=60. They receive 100 utility
from this consumption bundle. If the consumer wanted to reach a utility of 110, they would have to spend
a. We do not know anything about how much it would cost
b. Less than 100, but we do not know exactly how much from the information given
c. Exactly 110
d. More than 100, but we do not know exactly how much from the information given
= = 1p
x
p
y
A consumer has preferences over x and y represented by the utility function . Currently, prices are and .
There will be a substitution effect equal to zero if the price of x increases to
a. 6
b. 8
c. Both of these have substitution effects equal to zero
d. Neither of these have substitution effects equal to zero
U(x, y) = 2x+3y = 5p
x
= 10p
y
Question 16
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Question 17
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Question 18
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The price of good changes from 2 to 4. A consumer with an income of 100 buys 25 units of to maximize their utility before the price
change and 15 units after. If they had kept utility constant at the original level and minimized expenditure, they would have purchased 18
units of . What is the substitution effect from this price change?
a. -10
b. -7
c. -2
d. -3
x x
x
What is the substitution effect for a consumer with utility function for a small change in the price of x?
a.
b. 0
c.
d.
U(x, y) = min(2x, 3y)
1
2
I
2
I
p
2
x
When the price of a good increases, a consumer with a fixed income decreases their total consumption of that good by 10 units. If the
substitution effect for that price change is -15, then it must be that
a. The good is a normal good
b. The income effect is larger (in absolute value) than the substitution effect
c. The good is an inferior good
d. The income effect and the substitution effect have the same sign
Question 19
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Question 20
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A consumer has utility function . The consumer has an income of 20 and both prices are equal to 1. The price of y increases
to 2, which decreases their utility. What amount of income at the old prices would have given the consumer the same amount of utility they
get at the new prices?
a. 15
b. 10
c. 5
d. 30
U(x, y) = x+4y
Consumers divide their income between junk food (J) and healthy food (H). They have a utility function given by . The
consumer's income is 100, and The government wants to discourage consumption of junk food and imposes a tax of 2 on
each unit of junk food purchased. By what percent does this decrease consumption of junk food?
a. 100%
b. 33.3%
c. 50%
d. 67.7%
U(J,H) = J
1/3
H
2/3
= 2p
J
= 4p
H
Question 21
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Question 22
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Question 23
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A student is solving their Econ 11 exam and they encounter a partial equilibrium question which includes a consumer with utility function
and production function . The student thinks it would be easier to work with the
equations if they squared everything, writing and . They solve through the problem with these functions and find the
equilibrium price. Did the student make a mistake?
a. Yes, because squaring the production function will give them a different answer than using the original equation
b. Yes, because squaring the utility function will will give them a different answer than using the original equation
c. No, they did not make a mistake
d. Yes,  because squaring either function will will give them a different answer than using the original equation
U = U(x, y) = x
1/2
y
1/2
Q= F (x, y) = x
1/2
y
1/2
U = xy Q= xy
A firm has a production function that is constant returns to scale. With 100 units of labor and 100 units of capital, the firm produces 400 units
of output. With 50 units of labor and 100 units of capital, it would produce
a. Exactly 200 units of output
b. Between 200 and 400 units of output
c. Less than 400 units of output, but we cannot narrow the range further than that
d. Less than 200 units of output
Which of the following production functions has diminishing marginal product of labor and capital but increasing returns to scale?
a.
b.
c. It is impossible to have diminishing marginal product of both inputs and increasing returns to scale
d.
F (K,L) =
K
1/2
L
3/4
F (K,L) =K
2
L
2
F (K,L) =K
1/4
L
3/4