Full Name: ________________________________________________ 17.12.2019 Microeconomics 1 classes Quiz 3 (15 points) 1. Fill in the table below with your final answers 2. Allowed items: own calculator, pens, pencils 3. Be prepared not to leave the room for the entire duration of the quiz 4. Have fun! :) Question Your Answer Problem 1 Problem 2 Problem 3 Problem 4 Problem 1 (4 points): Donald consumes goods x and y. His utility function is U(x, y) = xy3. He is endowed with 10 units of x and 15 units of y. The price of x is $1 and the price of y is $2. Find his NET demand for x. Show your calculations below. Problem 2 (3 points): At prices ($4, $2), Natalia chooses the bundle (9, 18) (bundle A), and at prices ($1, $2), she chooses the bundle (8, 14) (bundle B). Choose the correct answer. a) bundle B is revealed preferred to the bundle A and she does not violate WARP b) bundle A is revealed preferred to the bundle B and she does not violate WARP c) SARP is violated but WARP is not d) WARP is violated e) none Problem 3 (3 points): Mark has a utility function: U(x, y) = x 0,5 y 0,7, his income is 960, the prices are px = 10 and py = 28. How many units of y does Mark demand if he is maximizing his utility? Show your calculations below. Problem 4 (5 points): Charlie’s utility function is xAxB. The price of apples used to be $1, the price of bananas used to be $2, and his income used to be $40. If the price of apples increased to $4 and the price of bananas stayed constant, the substitution effect on Charlie’s apple consumption would reduce his consumption by ....... apples. Show your calculations below.