help get the answers.. its a complete question

1. (10 points) Annie and David are painting their apartment. At the paint store, David says he prefers Canary Yellow to Bumblebee Yellow, Lime Yellow, and Crayola Yellow. Annie finds new paint samples and asks David to compare Canary Yellow to School Bus Yellow and to Sunrise Yellow. David prefers Sunrise Yellow to Canary Yellow, and prefers School Bus Yellow to Canary Yellow. He also prefers Sunrise Yellow to School Bus Yellow. The store is out of Sunrise Yellow, so they buy School Bus Yellow and paint their apartment with it. David then insists that they go back, buy Lime Yellow, and repaint the apartment. True/False/Uncertain: David has rational preferences (as we define them). Problem 1 courtesy of William Wheaton. Used with permission. 2. (20 points) In each of the following examples, a consumer purchases just two goods: x and y. Based on the information in each of the following parts, sketch a plausible set of indifference curves (that is, draw at least two curves on a set of labeled axes, and indicate the direction of higher utility). Also, write down a utility function u(x, y) consistent with your graph. Note that although all these preferences should be assumed to be complete and transitive (as required for utility representation), not all will be monotone. (a) (4 points) Jessica enjoys bagels x and coffee y, and consuming more of one makes consuming the other more enjoyable. (b) (4 points) Plamen loves mocha swirl ice cream x, but he hates mushrooms y. (c) (4 points) Jennifer likes Cheerios x, and neither likes nor dislikes Frosted Flakes y. (d) (4 points) Edward always buys three white tank tops x for every pair of jeans y. (e) (4 points) Nancy likes both peanut butter x and jelly y, and always gets the same additional satisfaction from an ounce of peanut butter as she does from two ounces of jelly. 3. (20 points) A consumer's preferences are representable by the following utility function: 1 u(x, y) = x 2 + y. (a) (10 points) Obtain the MRS of the consumer at an arbitrary point (x, y), where x > 0 and y > 0. (b) (10 points) Suppose the price of the second good (y) is 1, and the price of the first good (x) is denoted by p > 0. If the consumer's income is m > 0, obtain the optimal consumption bundle of the consumer (in terms of m and p). [Caution: make sure you cover cases in which m is relatively low, as well as cases in which m is relatively high.] 4. (25 points) It is exactly 24 hours before Lauren's physics final. She has an economics final directly after the physics final and has no time to study in between. Lauren wants to be a physicist, so she places more weight on her physics test score. Her utility function is given by u(p, e) = 0.6 ln(p) + 0.4 ln(e) where p is the score on the physics final and e is the score on the economics final. Although she cares more about physics, she is better at economics; for each hour spent studying economics she will increase her score by 3 points, but her physics score will only increase by 2 points for every hour spent studying physics. Studying zero hours results in a score of zero on both subjects (although ln(0) is not defined, assume her utility for a score of zero is negative infinity). (a) (5 points) What constraints does Lauren face in her test score maximization problem? (b) (5 points) How many hours should Lauren optimally spend studying physics? How many hours studying economics? (hours are divisible) (c) (5 points) What economics and physics test scores will she achieve (i.e. what are e and p)? (d) (5 points) What utility level will she achieve? 1 (e) (5 points) Suppose Lauren can get an economics tutor. If she goes to the tutor, she will increase her economics test score by 5 points for every hour spent studying instead of 3 points, but will lose 4 hours of study time by going to the tutor. She cannot study while at the tutor, and going to the tutor does not directly improve her test score. Should Lauren go to the tutor?

1. (12 points) Assume the government has two policy options, a cash grant of $200 and providing food stamps worth $200. (a) (3 points) Draw the budget constraint faced by the consumer in each of these two situations. (b) (3 points) Now, draw a set of indifference curves that corresponds to an individual who would be indifferent between these two policies. (c) (3 points) Next, draw a set of indifference curves corresponding to an individual who would prefer to have a cash grant rather than food stamps. (d) (3 points) Is there a consumer who strictly prefers food stamps to cash grants (i.e., is better off with food stamps rather than a cash grant?) Why does the government use food stamps? Problem 1 by MIT OpenCourseWare. 2. (22 points) Suppose there are exactly two consumers (Albie and Bubbie) who demand strawberries. Suppose that Albie's demand for strawberries is given by qa(p) = pfa(Ia) and Bubbie's demand is given by

qb(p) = pfb(Ib)

where Ia and Ib are Albie and Bubbie's incomes, and fa() and fb() are two unknown functions. (a) (5 points) Find Albie and Bubbie's (own-price) elasticities of demand, qa,p and qb,p. Use the sign y x convention that y,x = x y . (b) (5 points) Suppose that > 0 > . Are strawberries a Giffen good for Albie? Are strawberries a Giffen good for Bubbie? (c) (12 points) Are strawberries an inferior good for Albie? Are strawberries an inferior good for Bubbie? Assume that these demands arise from utility maximization, given linear budget constraints. Hint: This question should not require much/any algebra beyond (b). 3. (24 points) Joe considers beer and soda to be perfect substitutes at a rate of 1:2, that is, he always receives the same utility if he has one beer or two sodas to drink. He spends $12 a day on drinks, and beers cost $3 while sodas cost $1 each. However, one day the price of beers decreases to $2; there is no change in his budget. (a) (6 points) How does consumption change when the price of beers changes? What is Joe's new level of utility? (b) (6 points) Show with the aid of a graph what happens to the optimal allocation and the level of utility when the price of beer changes. (c) (6 points) How much must Joe's budget decrease to return him to the original utility level? (d) (6 points) Now assume the price of beers returns to the original price of $3. Describe the demand curve for soda holding the price of beer and income constant; a graphic representation is optional. Problem 3 by MIT OpenCourseWare. 4. (42 points) Xiaoyu spends all her income on statistical software (S) and clothes (C). Her preferences can be represented by the utility function: U(S, C) = 4 ln(S) + 6 ln(C). (a) (6 points) Compute the marginal rate of substitution of software for clothes. Is the MRS increasing or decreasing in S? How do we interpret this? (b) (6 points) Find Xiaoyu's demand functions for software and clothes, QS(pS, pC , I) and QC (pS, pC , I), in terms of the price of software (pS), the price of clothes (pC ), and Xiaoyu's income (I). 1 (c) (6 points) Draw the Engel curve for software. (d) (6 points) Suppose that the price of software is pS = 2, the price of clothes is pC = 3, and Xiaoyu's income is I = 10. What bundle of software and clothes (S, C) maximizes Xiaoyu's utility? (e) (6 points) Suppose the price of software increases to pS = 4. What bundle of software and clothes does Xiaoyu demand now? (f) (6 points) Given the price increase, how much income does Xiaoyu need to remain as happy (have the same utility) as she was before the price change? What bundle of software and clothes would Xiaoyu consume if she had that additional income, given the new prices? (g) (6 points) Going back to the situation in part (e) (pS = 4 and I = 10), decompose the total change of software and clothes demanded into substitution and income effects. In a clearly-labeled diagram with software on the horizontal axis, show the income and substitution effects of the increase in the price of software.

Assignment 2: A Refresher of Intermediate Microeconomics 1. Country A has an industry M using the production function Y = K0.3 0.7, where Y is the output of industry M, K is the capital input and L is the labor input. Find the marginal product of labor (MPL) and the marginal product of capital (MPK). Show diminishing MPL and MPK. 2. Country A has an industry N using the production function Y = K0.6L0.4, where Y is the output of industry N, K is the capital input and L is the labor input. Find the marginal rate of technical substitu tion (MRTS) between capital and labor. State the cost minimization condition (with the MRTS and the price of capital (r) and the price of labor (w)). 3. Which industry is labor intensive, industry M from Q1 or industry N from Q2? (Hint: Use the cost minimization condition in both indus tries.)

As an intern with the local home builder's association, you have been asked to analyze the state of the local housing market, which has suffered during a recent economic crisis. You have been provided two data sets in the file HousingBubble. The Pre-Crisis worksheet contains information on 1,978 single-family homes sold during the one-year period before the burst of the "housing bubble." These 1,978 observations have been split into a training set (1,186 observations) and a validation set (792 observations). The PostCrisis worksheet contains information on 1,657 single-family homes sold during the one-year period after the burst of the housing bubble. These 1,657 observations have been split into a training set (994 observations) and a validation set (663 observations). The data in both the Pre-Crisis and Post-Crisis worksheets have been appended with the same set of 2,000 observations designated as a test set. This test set corresponds to homes currently for sale, and because they have not yet been sold, each of these 2,000 observations has an artificial value of zero for the sale price. a. Consider the Pre-Crisis worksheet data. Construct a model to predict the sale price using k-nearest neighbors with k=1, . . ., 10. Use Price as the output variable and all the other variables as input variables. Standardize the input variables to adjust for the different magnitudes of the variables. i. What value of k minimizes the RMSE on the validation set, and what is the value of this RMSE? ii. Use the k-nearest neighbors with the value of k that minimizes RMSE on the validation set to predict sale prices of houses in the test set.

Repeat part (a) with the Post-Crisis worksheet data. c. For each of the 2,000 houses in the test set, compare the predictions from part (a-ii) based on the pre-crisis data to those from part (b-ii) based on the post-crisis data. Specifically, compute the percentage difference in predicted price between the pre-crisis and post-crisis models, where percentage difference=(post-crisis predicted price-pre-crisis predicted price)/pre-crisis predicted price. What is the average percentage change in predicted price between the pre-crisis and post-crisis models?

SLOPE The slope of a line or curve is a measure that indicates whether the relationship between the variables is positive or negative and how much of a response there is in Y (the variable on the vertical axis) when X (the variable on the horizontal axis) changes. The slope of a line between two points is the change in the quantity measured on the Y-axis divided by the change in the quantity measured on the X-axis. We will normally use A (the Greek letter delta) to refer to a change in a variable. In Figure 1A.4, the slope of the line between points A and B is AY divided by AX. Sometimes it is easy to remember slope as "the rise over the run," indicating the vertical change over the horizontal change. To be precise, AX between two points on a graph is simply X minus X, where X is the X value for the second point and X is the X value for the first point. Similarly, AY is defined as Y minus Y, where Y is the Y value for the second point and Y is the Y value for the first point. Slope is equal to

Explore tools for evaluating stocks, bonds, and mutual funds and make a selection based on your investment philosophy and goals as follows:

a- Stocks: you will invest $4,000 in at least two stocks. For ideas on where to invest, think about two companies that you would like to work for, shop with, or have a general interest in. Visit Yahoo Finance and type their name into the search box to find out more information on each company. An alternative method would be to generate a list of stocks using a stock screener website such as CNBC's Stock Screener (click "GO TO SCREENER" under the first pre-built "Solid Companies/Solid Stocks") and selecting two stocks from the results. After determining your preferred method, review the information provided and indicate the company name, the price per share, and the number of shares purchased for each stock.

b- Bonds: you will invest $4,000 in at least two bonds. Assume that you had three choices: Bond #1 choice: City of Detroit 1%, matures 12/31/27, cost $1,000; Bond #2 choice: Ford Motor Company 1.9%, matures 12/31/27, cost $1,000; Bond #3 choice: XYZ Technology 3.3%, matures 12/31/27, cost $1,000 (this is a new start-up company without any previous bond sales). Describe the type of category that each bond falls into (i.e. municipal or corporate), one benefit and one risk of investing in each, and the tax advantage or disadvantage of investing in each. Finally, decide on which combination of bonds that you will invest in and how many of each that you will purchase. Support your response.

c- Mutual Funds: you will invest $4,000 in at least two mutual funds. For ideas on fund investments, visit Fidelity, Vanguard, or a mutual fund company that you would like to explore. Review the information provided and indicate the mutual fund name, the price per share, and the number of shares purchased for each mutual fund. This is the third of three Spending Diary installments as outlined in Module B located in the Learning Modules section.

Based on your analysis of your diary, provide your answers with a separate, numbered response to correspond to each of the following items:

What did your spending diary reveal about your spending habits during the time period covering this third installment?

If you made changes as a result of the first or second installments, did you see any improvement or obtain the desired result that you were looking for? Also, would you consider making any changes as a result of this installment?

What portion of your spending involves expenses associated with health-related insurance or health-related expenses? Is there any way to reduce these costs?

Give one example of how your daily spending diary can assist you when planning and implementing a budget.

Give one example of how your daily spending diary can assist you in preparing a personal Balance Sheet.

How can your spending diary assist you in reducing income taxes? Give one example.

How can your spending diary assist you in developing an investment philosophy and strategy for long-term financial security? Give one example

. How does appropriate information management affect a business's relationship with its customers? A. Businesses earn higher profits. B. Businesses serve customers more effectively. C. Businesses lose focus on customers. D. Businesses make better financial decisions. 73. When a business uses computer technology to manage its money and move it among different accounts, it is taking advantage of A. electronic transfer of funds. B. hardware. C. expert systems. D. electronic data interchange. 74. You cannot communicate with your computer without A. Microsoft Windows. B. a wireless mouse. C. an operating system. D. a mobile device. 75. Which of the following is usually the quickest way that businesses can obtain information about unknown potential new vendors that are located in other parts of the country: A. Phone an agent B. Send an email to the vendors C. Fax a request to the vendors D. Search the Web 76. Businesses often use word-processing computer software to produce A. detailed reports, memos, and contracts. B. complex graphics, letters, and reports. C. research reports, spreadsheets, and tables. D. business plans, contracts, and spreadsheets.

77. If a business wants to send a mailing to customers in specific geographic regions, it should set the database query to sort its customer information by A. name. B. sales volume. C. state. D. street number. 78. Computer programs that allow businesses to manage all types of activities, such as inventory control and finance, are known as A. integrated software application packages. B. electronic communications programs. C. interactive information display packages. D. wireless connectivity programs. 79. What is an important consideration when selecting graphics and posting them on a business's website? A. Font size B. Download time C. Descriptive links D. Log files 80. Operations activities are most closely related to a business's A. taxes. B. name. C. product. D. location. 81. Who is responsible for making sure that a business is a healthy, hazard-free place to work that complies with government regulations? A. The employer B. Employees C. The government D. Local law enforcement 82. To prevent injuries when operating

Assignment 2: A Refresher of Intermediate Microeconomics 1. Country A has an industry M using the production function Y = K0.3 0.7, where Y is the output of industry M, K is the capital input and L is the labor input. Find the marginal product of labor (MPL) and the marginal product of capital (MPK). Show diminishing MPL and MPK. 2. Country A has an industry N using the production function Y = K0.6L0.4, where Y is the output of industry N, K is the capital input and L is the labor input. Find the marginal rate of technical substitu tion (MRTS) between capital and labor. State the cost minimization condition (with the MRTS and the price of capital (r) and the price of labor (w)). 3. Which industry is labor intensive, industry M from Q1 or industry N from Q2? (Hint: Use the cost minimization condition in both indus tries.) 4. A US firm is considering whether to locate its new plant in China or in the US. This firm's production function is q = L 0.5L05 where q is the output, and L, and Lu, are the number of skilled labor hours and unskilled labor hours. Suppose that the hourly wage rates are w; = 15 and w = 5 in China and w, = 20 and w, 10 in the US (all in USDs). Find L., Lu, and the cost of producing q = 100 in China and in the US. Assume that there is no transportation costs or tariffs, where should the firm locate its new plant? 5. The inverse demand curve of a firm is p = 100 - Q. The firm's cost curve is C(Q) = 10+5Q. What is the profit-maximizing solution to Q? How does your answer change if C(Q) = 100+5Q?