Suppose James's preferences over consumption bundles (X, Y) can be represented by the utility function U₁(X, Y) = min{2X, Y} and suppose Petra's preferences over the consumption bundles (X, Y) can be represented by the utility function Up(X,Y) = min{3X, 8Y}. Which of the following statements is NOT true? (a) Both James's and Petra's preferences are homothetic (b) The ratio at Petra's optimal bundle is greater than the ratio at James's optimal bundle (c) The functions U₁ and Up are both homogeneous of degree 1 (d) If James's and Petra's incomes triple they will respond by tripling their purchases

Suppose James's preferences over consumption bundles (X, Y) can be represented by the utility function U₁(X, Y) = min{2X, Y} and suppose Petra's preferences over the consumption bundles (X, Y) can be represented by the utility function Up(X,Y) = min{3X, 8Y}. Which of the following statements is NOT true? (a) Both James's and Petra's preferences are homothetic (b) The ratio at Petra's optimal bundle is greater than the ratio at James's optimal bundle (c) The functions U₁ and Up are both homogeneous of degree 1 (d) If James's and Petra's incomes triple they will respond by tripling their purchases

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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