ECON 410: Problem Set #1

Directions:
1. This assignment is due by 11:59 pm on Wednesday, August 19.

2. Your answers must be submitted through Sakai. You can find “Problem Set #1” under Tests
& Quizzes on Sakai.

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4. For each question, select the one best answer. Answer 8 out of 10 questions correctly to pass.
 3 𝑥 −1/3 𝑦 3/4 𝑎
1. Solve for x in the following expression: 4 𝑥 2/3 𝑦 −1/4 = 𝑏 .

3𝑏
a. 𝑥 = (4𝑎) 𝑦
3𝑎
b. 𝑥 = (4𝑏) 𝑦
4𝑏
c. 𝑥 = (3𝑎) 𝑦
4𝑎
d. 𝑥 = (3𝑏) 𝑦

1 1
𝑎
2. Solve for x in the following expression: (𝑥 2 + 𝑦 2 )2 = 𝑏 .

𝑎
a. 𝑥 = 𝑏 − 𝑦
2
𝑎 1/2 1
b. 𝑥 = ((𝑏) − 𝑦2)
𝑎
c. 𝑥 = 2𝑏 − 𝑦 1/2
2
𝑎 1/2
d. 𝑥 = ((𝑏) − 𝑦)

ln (𝑥)
3. Partially differentiate the following expression with respect to x: y = .
𝑥2
𝑑𝑦 1 − ln(𝑥)
a. =
𝑑𝑥 𝑥2

𝑑𝑦 𝑥 − ln(𝑥)
b. =
𝑑𝑥 2𝑥 4

𝑑𝑦 1 − 2 ln(𝑥)
c. =
𝑑𝑥 𝑥3

𝑑𝑦 𝑥 2 − ln(𝑥)
d. =
𝑑𝑥 𝑥4
 1 3
4. Partially differentiate the following expression with respect to z: y= 𝑥 3 𝑧 4 .
2 1
𝑑𝑦 1
a. = 4 𝑥 −3 𝑧 −4
𝑑𝑧
1
𝑑𝑦 3
b. = 4 𝑧 −4
𝑑𝑧
1 1
𝑑𝑦 3
c. = 4 𝑥 3 𝑧 −4
𝑑𝑧
2 3
𝑑𝑦 1
d. = 3 𝑥 −3 𝑧 4
𝑑𝑧

1 1 2
5. Partially differentiate the following expression with respect to x: 𝑦 = (100 + 𝑥 + 𝑧 ) .
2 2

1 1
𝑑𝑦
a. = 2(100 + 𝑥 2 + 𝑧 2 )
𝑑𝑥
1
𝑑𝑦
b. = 100 + 𝑥 + 𝑧 2
𝑑𝑥
𝑑𝑦 100 + 𝑥 1/2 + 𝑧 1/2
c. =
𝑑𝑥 𝑥
𝑑𝑦 100 + 𝑧 1/2
d. = +1
𝑑𝑥 𝑥 1/2

6. Rachel is on a strict budget each month for snacks and drinks. Last month, she spent her
entire budget on 30 drinks and 20 snacks. Her MRT of snacks for drinks is 4/3, and the price
of a drink is $1.50. What is her budget?
a. I = $85
b. I = $67.50
c. I = $90
d. I = $75.25
(See Besanko 4.1 and Budget Constraints Practice Problem #1.)
7. Krupa’s budget line has changed from A to B. Which of the following could explain this
change?
a. The price of food doubles while the price
of clothing triples.
b. Income and the price of food both
decrease by 10%.
c. Income and the price of clothing both
triple.
d. Income increases by 15% and the price of
clothing increases by 30%.
e. Income decreases by 20% and the price of food decreases by 10%.
(See Besanko 4.2 and Budget Constraints Practice Problem #5.)

8. Originally, the price of X is $20 and the price of Y is $80. If the price of X decreases by $5
and the price of Y decreases by $20, the new budget line will
a. move inward and be parallel to the old budget line.
b. move outward and be parallel to the old budget line.
c. move outward and become steeper.
d. move inward and become steeper.
e. move outward and become flatter.

(See Besanko 4.2 and Budget Constraints Practice Problem #3.)

9. Connie has a monthly income of $200 that she allocates between meat and potatoes. Suppose
meat costs $4 per pound and potatoes usually costs $2 per pound. This week, Connie’s
supermarket offers a promotion. If she buys 20 pounds of potatoes (at $2 per pound), she gets
the next 10 pounds for free. This offer applies only to the first 20 pounds she buys. All
potatoes in excess of the first 20 pounds (excluding bonus potatoes) are still $2 per pound.
Which figure represents her budget constraint this week under the promotion?

a. Figure A
b. Figure B
c. Figure C
d. Figure D
(See Besanko 4.2 and 4.13 and Budget Constraints Practice Problems #2 and 4.)

10. Sarah is planning a birthday party and has $I to spend on balloons and party favors. The
price of a party favor is $3. Her budget line for balloons and party favors is shown in the
figure below. The MRT of party favors for balloons is 4. What is her budget, I?
a. $600
b. $240
c. $200
d. $150
Balloons
e. $100

200

Party Favors
(See Besanko 4.1 and Budget Constraints Practice Problem #1.)