MGEB02H3 Study Guide - Final Guide: University Of Toronto Scarborough, Demand Curve, Indifference Curve
27 Jan 2016
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You are allowed the use of a non-programmable calculator. Answer all following 6 questions in the exam paper: Question-1 [35 points] answer the following short questions: (8 points) a consumer is considering choosing a calling plan for her cell phone. The plan has a fixed monthly fee of , and it gives 200 free minutes per month and charges. The consumer has a monthly income of , and she spend it on cell phone and another composite good y, where py =. Her utility function is given by yxu x y. , where x is the minutes of cell phone she uses in a month. Graph your solution on a diagram including the budget line and a representative indifference curve. This is an interior solution but is not optimal since there is 200 free minutes. Should expect a corner solution, with x = 200 and y = 60. Check mrs at this bundle (1/2000. 5 < 0. 1).
