5. For each of the following assertions, first state whether it is true or false. Then, provide full support for your statement by using theorems, definitions and/or examples where applicable. No marks will be awarded for unsupported statements. (a) Consider the utility function U(x1,x2) = (xf + x%). The marginal rate of substitution of good r2 for good r1 is equal to ()". (b) Let u(x) represent some consumer's monotonic preferences for a e R". . If f(x) = u(x) – 10 000, then f (x) also represents these preferences. (c) A consumer's preferences are defined over R as (x1, x2) > (yı, Y2), if x1 + x2 < Y1 + Y2- These preferences are both locally non-satiated and strictly monotonic. (d) The preferences of a consumer with utility function U (x1, x2) = (1+x1)(1+x2) are convex. [Note: You may assume that consumption is confined to the non-negative quadrant of R2, i.e. x1 >0 and x2 > 0]. (e) The degree of homogeneity in prices of the Marshallian demand function r:(p, y) = a a+3 pi implies that there is no change in the demand for good i as prices increase.

5. For each of the following assertions, first state whether it is true or false. Then, provide full support for your statement by using theorems, definitions and/or examples where applicable. No marks will be awarded for unsupported statements. (a) Consider the utility function U(x1,x2) = (xf + x%). The marginal rate of substitution of good r2 for good r1 is equal to ()". (b) Let u(x) represent some consumer's monotonic preferences for a e R". . If f(x) = u(x) – 10 000, then f (x) also represents these preferences. (c) A consumer's preferences are defined over R as (x1, x2) > (yı, Y2), if x1 + x2 < Y1 + Y2- These preferences are both locally non-satiated and strictly monotonic. (d) The preferences of a consumer with utility function U (x1, x2) = (1+x1)(1+x2) are convex. [Note: You may assume that consumption is confined to the non-negative quadrant of R2, i.e. x1 >0 and x2 > 0]. (e) The degree of homogeneity in prices of the Marshallian demand function r:(p, y) = a a+3 pi implies that there is no change in the demand for good i as prices increase.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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