2023/4/17 18:15 Quiz: ECON5001 Practice In-semester Test
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ECON5001 Practice In-semester Test
Started: Apr 17 at 20:15
Quiz Instructions
ECON5001 Microeconomic Theory
In-semester Test
Time allowed: 90 minutes.
This test is closed book.
You may use a handheld calculator and blank scratch paper.
This exam counts for 30% of the course mark in ECON5001, and is graded out of 30 points.
You should answer all questions to the best of your ability.
There is no choice of questions to answer and no penalty for incorrect answers.
Section A: Multiple choice questions
The questions in this section are each worth 1 point (10 points in total)
1 ptsQuestion 1
16
None of the other answers is correct
12
Anaïs can just afford 21 mangos and 39 star fruits. She can also just afford 25
mangos and 31 star fruits. The price of mangos is 8. What is the price of star
fruits?
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4
8
1 ptsQuestion 2

A species of aliens has three left feet and one right foot. These aliens have perfect
complement preferences over shoes, valuing them in sets consisting of three left
shoes and one right shoe. The price of individual shoes (left or right) is $12 each.
What is the equation of the Engel curve for right shoes?
1 ptsQuestion 3
21
10.5
None of the other answers is correct
63
7
Juliette consumes only grapes and grapefruits. Her utility function is
, where is the number of grapes and is the number of
grapefruits. Juliette’s income is $105. The prices of grapes and grapefruits is $1
and $3 respectively. How many grapefruits will Juliette consume?
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1 ptsQuestion 4
None of the other answers is correct
Which of the following utility functions are not homothetic?
1 ptsQuestion 5
The income effect is zero, since Nadine’s income is unchanged
The substitution effect on the demand for good 2 is zero, since the price of good 2 is
unchanged
More than one of these statements is correct
The substitution effect increases the demand for good 2, and since the income effect is
zero, the demand for good 2 rises
The substitution effect of the price change increases the demand for good 2 and
decreases the demand for good 1
Nadine consumes two goods. Her utility function over these goods is
. Suppose that the price of good 1 increases, and that both the
price of good 2 and Nadine’s income are unchanged. Which of the following
statements is correct?
1 ptsQuestion 6
Léonie has an income of 64 francs to spend on baguettes and croissants.
Baguettes cost 7 francs and croissants cost 12 francs. Léonie’s utility function is
, where is baguettes and is croissants. Léonie’s utility
maximising choice is to consume
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some of both, but more croissants than baguettes
only baguettes
an equal amount of baguettes and croissants
some of both, but more baguettes than croissants
only croissants
1 ptsQuestion 7
$620
$903
$860
$368
$1271
Chloé has a utility function , where and are
consumption in dollars in periods 1 and 2 respectively. If she had an income of
$860 in period 1 and $368 in period 2, and if the interest rate between these two
periods were 5%, how much would Chloé consume in period 1?
1 ptsQuestion 8
10
5
None of the other answers is correct
17
7
Geneviève’s net demands for vinyl records and compact discs are (5,-5)
respectively and her gross demands are (12,12) respectively. What is her initial
endowment of vinyl records?
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1 ptsQuestion 9
10
None of the other answers is correct
15
30
20
Danièle has 40 hours a week she can use for work or leisure. She earns 16 euros
an hour and has no other income. Her utility function is , where is
consumption in dollars and is leisure in hours. How many hours a week will
Danièle work?
1 ptsQuestion 10
She will accept this investment opportunity if her initial wealth is $2500 or more
She will accept this investment opportunity regardless of her initial wealth, because the
expected value is zero
There is not enough information to answer this question
She will reject this investment opportunity regardless of her initial wealth, because she is
risk averse
She will reject this investment opportunity if her initial wealth is $3000 or less
Éléna is offered an investment that will yield a profit of $900 with probability 0.25
and a loss of $300 with probability 0.75. Éléna has a von-Neumann utility function
over wealth with .
Section B
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Important instructions for Section B
Fill-in-the-blanks questions are scored automatically by the computer. Following
the instructions below will ensure that you will get full credit for correct answers.
1. Give your answers as numbers with no added commas and other symbols. For
example, write 1200, 0, -14 or 0.5. Do not write 1,200 (with a comma), $1200,
or 1/2.
2. If an answer has a finite decimal fractional part, include the fraction it in its
entirety and do not add trailing zeros. For example, write 5/8 as 0.625. Do not
write 0.62, 0.63, or 0.6250.
3. If an answer has an infinite decimal fractional part, include only the first two
digits after the decimal point and do not round the answer. For example, write
5/3 as 1.66, rather than 1.6, 1.67, 1.6666666, or 5/3.
4. Be aware of numerical accuracy problems with your calculator. For example,
some calculators will give the answer to as 9.99999999, instead of the
correct answer of 10. If this were the answer to some question, you should
notice that the correct answer is 10.
5. In questions on the slope of a line or on the marginal rate of substitution, both
positive and negative answers will be accepted. For example, if the slope of a
line is -2, then both -2 and 2 will be accepted as correct.
Section B1: Fill-in-the-Blank Questions
The questions in this section are worth 5 points in total
The questions in this section are about Albertine. Albertine has the utility function
over mangos and star fruits, where is the number of
mangos and is the number of star fruits.
5 ptsQuestion 11
Suppose that the price of mangos is $2 and that of star fruits is $3 and that
Albertine is endowed with 12 mangos and 8 star fruits,
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The maximum number of mangos that Albertine can afford is
The maximum number of star fruits that Albertine can afford is
Her gross demand for mangos will be
Her gross demand for star fruits will be
Her net demand for mangos will be
Her net demand for star fruits will be
Suppose now that the dollar value of Albertine’s endowment were the same, but
that prices were different, such that her net demand for mangos were zero. In that
case,
the price of mangos must be
the price of star fruits must be
Finally, suppose that the dollar value of Albertine’s endowment were the same, but
that prices were different, such that her net demand for star fruits were zero. In
that case,
the price of mangos must be
the price of star fruits must be
Section B2: Fill-in-the-Blank Questions
The questions in this section are worth 5 points in total
The questions in this section are about Isabel. Isabel has the utility function of
over kumquats and kohlrabies, where is the quantity
of kumquats and is the quantity of kohlrabies. Isabel's income is $252. The
price of kumquats is $2 and the price of kohlrabies is $3.
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4.5 ptsQuestion 12
A just affordable bundle with 42 kumquats has kohlrabies.
At this bundle, Isabel’s marginal rate of substitution of kohlrabies for kumquats
would be
A just affordable bundle with 42 kohlrabies has kumquats.
At this bundle, Isabel’s marginal rate of substitution of kohlrabies for kumquats
would be
The slope of the budget line is
Isabel’s marginal rate of substitution of kohlrabies for kumquats would be equal
to the slope of the budget line if she purchases kumquats
and kohlrabies
Isabel’s utility maximising choice is kumquats and
kohlrabies
0.5 ptsQuestion 13
neither convex nor homothetic
homothetic but non-convex
there is not enough information to answer this question
both convex and homothetic
convex but non-homothetic
Isabel’s preferences are
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Section B3: Fill-in-the-Blank Questions
The questions in this section are worth 5 points in total
The questions in this section are about two friends: Odette and Yasmine. Odette's
utility function over artichokes and okras is , where
is the quantity of artichokes and is the quantity of okras that Odette
consumes. Yasmine's utility function over artichokes and okras is
, where is the quantity of artichokes and is the
quantity of okras that Yasmine consumes. Both Odette and Yasmine have an
income of $140.
2 ptsQuestion 14
Given prices of $2 and $4, Odette would purchase artichokes
and okras. Given the same prices, Yasmine would purchase
artichokes and okras.
0.5 ptsQuestion 15
Both prefer Odette’s bundle to Yasmine’s bundle
Both prefer their friends bundle to that of their own
Both Odette and Yasmine prefer their bundle to that of their friend
Both prefer Yasmine’s bundle to Odette’s bundle
None of the other answers is correct
How would Odette and Yasmine rank their own bundle relative to that of their
friend?
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0.5 ptsQuestion 16
There is not enough information to answer this question
Both Odette's preferenecs and Yasmine's preferences are well-behaved
Neither Odette’s preferences nor Yasmine’s preferences are well-behaved
Odette's preferences are well-behaved, but Yasmine's preferences are not
Yasmine’s preferences are well-behaved, but Odette’s preferences are not
Are the friends’ preferences well-behaved?
0.5 ptsQuestion 17
Both artichokes and okras are normal goods for both Odette and Yasmine
There is not enough information to answer this question
Both artichokes and okras are normal goods for Odette, but not for Yasmine
Artichokes and/or okras are inferior goods for both Odette and Yasmine
Both artichokes and okras are normal goods for Yasmine, but not for Odette
Are these normal goods?
0.5 ptsQuestion 18
None of the other answers is correct
Artichokes and okras are complements for both Odette and Yasmine
Artichokes and okras are complements for Odette and substitutes for Yasmine
Are they complements or substitutes?
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Artichokes and okras are substitutes for both Odette and Yasmine
Artichokes and okras are substitutes for Odette and complements for Yasmine
1 ptsQuestion 19
Odette will be indifferent between Yasmine’s bundle and her own bundle
Yasmine will be indifferent between Odette’s bundle and her own bundle
Yasmine could have maximised her own utility by choosing the same bundle as Odette
Odette could have maximised her own utility by choosing the same bundle as Yasmine
None of the other answers is correct
Suppose the price of artichokes and okras were $3 and $1 respectively, and that
both Odette and Yasmine make a choice that is optimal given their respective
preferences. Which of the following must be true? If more than one answer is
correct, you should mark all the correct answers (and none of the incorrect ones)
for full credit
Section B4: Fill-in-the-Blank Questions
The questions in this section are worth 5 points in total
The questions in this section are about Élise. Élise has a utility function of
, where is consumption in period 1 and is
consumption in period 2. Élise earns an income of $68040 in period 1 and
$102060 in period 2.
4 ptsQuestion 20
Suppose that the interest rate is 20%
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If Élise does not consume anything in period 1, the most she can consume in
period 2 is
If Élise does not consume anything in period 2, the most she can consume in
period 1 is
Élise’s utility maximisation choice is to consume in period 1
and in period 2
If Élise makes this choice, her marginal rate of substitution of period 2
consumption to period 1 consumption would be
If, instead, the interest rate were 0%, Élise would consume
in period 1 and in period 2
Élise would neither save nor borrow if the interest rate were
per cent
1 ptsQuestion 21
Can you say, in general, what Élise’s preference would be between (i) an interest
rate which makes it optimal for her to be a borrower, (ii) an interest rate
which makes it optimal for her to be a saver, and (iii) an interest rate
which makes it optimal for her to be neither a saver nor a borrower? If more than
one answer is correct, you should mark all the correct answers (and none of the
incorrect ones) for full credit
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