Econ 200H: David Reiley

Due Thursday, 14 September 2006

## Problem Set #2

As before, the following exercises come from the end-of-chapter problems in
Taylor’s textbook unless otherwise noted.

I suggest attempting the problems for each chapter as you prepare for each
day’s class. For example, before the day we cover Chapter 6, please read
the chapter and attempt the problems assigned from that chapter. If you find
yourself getting stuck on one of the problems, then you’ll know what to
ask me about during class (via e-mail). In general, I recommend not spending
more than about 20 minutes thinking about any single problem. (Extra-credit
problems are an exception – I expect them to take longer, but they are
an opportunity for those who are interested in learning more.) If you find yourself
spending more time than this, then I recommend making a note to ask me (or emailing
me your question), so that I can help you get unstuck, and then move on to the
next problem.

- (5 points) Which gives you more total utility: 15 gallons of water per
day, or 20 gallons of water per day? Why?
- (5 points) At which level of water consumption do you get greater marginal
utility: 15 gallons per day, or 20 gallons per day? Why?
- (10 points) Taylor, problem 5.1.
- (10 points) Taylor, problem 5.7.
- (10 points) Taylor, problem 5.8.
- (10 points) Taylor, problem 6.1.
- (10 points) Taylor, problem 6.3.
- (10 points) Taylor, problem 6.4.
- (10 points) Taylor, problem 6.6.
- (10 points) Taylor, problem 6.7.
- (10 points) Taylor, problem 7.1.
- (10 points) Taylor, problem 7.5.
- (10 points) Taylor, problem 7.6.
- (10 points) Taylor, problem 7.7.
- (10 points) Taylor, problem 7.8.
- (10 points) Taylor, problem 7.11.
- (Optional - 25 extra-credit points) Read the Appendix to Chapter 5, on
Consumer Theory with Indifference Curves, and answer problems 5A.1-5A.4.
- (Optional -10 extra-credit points) Find a newspaper article that describes
a firm pursuing a goal other than profit maximization. Provide me with a copy
of the article (or a link to it), and write a paragraph describing the firm’s
objective and whether you think it is a reasonable way for the firm to behave.
Students should each come up with their own independent examples, even if
they have been working together on the rest of the problem set.