Week 1

Question 1

Elucidate the concept of Budget Constraint.

Answer 1

Question 2

Graphically compare the effect of Income tax and Ad valorem tax.

Answer 2

Question 3

Define a numeraire good.

Answer 3

Question 4

Name the types of Consumer Preferences, and state which assumptions are made about Prefences.

Answer 4

Question 5

Explain the concept of an indifference curve, and state the “3” Properties of Preferences.

Answer 5

Question 6

Explain the MRS?

Answer 6

Question 7

Illustrate the indifference curves of Perfect Suplements, Perfect Substitutes, A Good and a Bad, as well as a Neutral Good.

Answer 7

Question 8

Elucidate the concept of Ordinal Utility Functions.

Question 9

Give a mathematical example of the functions of Perfet Complements, Perfect Substitutes, Quasi-linear Preferences and Cobb-Douglas Preferences.

Question 10

Explain Marginal Utilites and show how they relate to the MRS.

Question 11

State the optimality condition for the utility maximization problem.