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Preferences Utility Problem Set

ECO

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18 views

Preferences Utility Problem Set

ECO

Uploaded by

cs826
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Preferences and Utility

Practice assignment

A. A basketball coach ranks players based on three criteria: height, strength, and speed. He prefers
one player over another if the player is better in at least two of the three criteria. Assume that
there are no players with the exact same height, nor the exact same strength, nor the exact
same speed. Does the coach have transitive preferences? (Hint: Give arbitrary scores to 3
players based on the criteria, and compare two players at a time.)

B. Write the utility function for the following preferences and draw the indifference curves (assume
perfectly divisible units in all cases):

a. I consider one unit of x to be as good as 3 units of y


b. I always make lemonade with 30 ml lemon juice and 50 ml sugar syrup
c. I like oats (x) and neither like nor dislike rice (y)
d. I am happy to always exchange 2 red pencils for 3 blue pencils
e. I always consume 1 spoon of peanut butter with 2 spoons of jam

C. Draw at least two indifference curves for each the following utility functions. Indicate which
direction does the utility increase in.
a. 𝑥 + √𝑦
b. min⁡(2𝑥, 3𝑦)
c. max⁡(2𝑥, 5𝑦)
d. 𝑦 + 𝑙𝑛𝑥
e. 𝑒 𝑥+𝑦
f. 4𝑥 2 + 9𝑦 2
g. log⁡(𝑥 2 + 𝑦 2 )
𝑥
h. 𝑦2

i. 𝑥 2 + 𝑦 2 + 2𝑥𝑦⁡
(Verify using Desmos, after trying it out by yourself)

D. Utility functions over commodities x and y for four people are given below. Which of the following
people have the same preferences? Support your explanation with a mathematical argument.
a. Person A: 𝑒 √𝑥+√𝑦
b. Person B: 2√𝑥𝑦 + 𝑥 + 𝑦

c. Person C: √𝑥 + √𝑦 − 2

d. Person D: −√𝑥 − √𝑦

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