II. Consider the following three market baskets: Clothing A B C Food 6 8 5 3 5 8 Which of the following cannot be true if a consumer likes both food and clothing? A. B. A and C could be on the same indifference curves. the consumer could be indifferent between A and B. the consumer could be indifferent between B and C. A and C could be on different indifference curves. C. D.

Çağla Ökten 1. Each day, Burcu, who is in third grade, eats lunch at school. She likes only Twinkies (t) and soda (s) and these provide her a utility of U(t, s) = √ts a. Find Burcu's demand for t and demand for s. b. If Twinkies cost $0.1 each and soda costs $0.25 per cup, how would Burcu spend the $1 that her mother give her? c. If the school tries to discourage Twinkie consumption by raising the price to $0.40, by how much will Burcu's mother have to increase her lunch allowance to provide her with the same level of utility she received in part a? 2. Ahmet's utility over good x and y is represented by the following utiity function: U(x, y) = x² + y² Let Px, Py and I denote price of good x, good y and Ahmet's income respectively. a. Graph Ahmet's indifference curves. Is MRS increasing or decrasing in x h Now suppose that Dy-$2 Dv-$4 and Abr car IS.

Complete this table on the picture.

Chocolate Bars per week 50 40 25 20 15 10 0 1 2 E b 3 C 6 4 5 d 12 13 14 Budget Line 10 Pizzas per week Use the graphs above to answer the following questions. The graph shows a consumer's budget allocation toward chocolate and pizza per week and the indifference curves of various combinations of those goods. A. Compare points "e" and "f": which point yields more utility for the consumer? "e" and "f" yield the same utili B. Given the budget of this consumer, how many total pizzas can this consumer purchase per week? 10 C. If this consumer wanted to maximize utility by purchasing some combination of chocolate and pizzas, how many pizzas would this consumer purchase? 4