Which of the following is not a required characteristic for a function U(.) to be considered a valid utility function? (Select all that apply) U(.) must be monotonically increasing in all possible bundles U(.) must be able to assign a utility to every possible bundle of goods For any two bundles, A and B, either U(A) ≥ U(B) or U(B) ≥ U(A) must be true For any three bundles, A, B, and C, if U(A) ≥ U(B) and U(B) ≥ U(C), then U(A) ≥ U(C)

Which of the following is not a required characteristic for a function U(.) to be considered a valid utility function? (Select all that apply) U(.) must be monotonically increasing in all possible bundles U(.) must be able to assign a utility to every possible bundle of goods For any two bundles, A and B, either U(A) ≥ U(B) or U(B) ≥ U(A) must be true For any three bundles, A, B, and C, if U(A) ≥ U(B) and U(B) ≥ U(C), then U(A) ≥ U(C)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.11P

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Joyce drinks both coffee (x) and tea (y). Her preferences over these two goods can be represented by the utility function U(x,y) =x + 3y^1/2 where x represents the number of pounds of coffee and y represents the number of cups of tea. a) Given her preferences, find her demand functions for coffee (x) and tea (y). b) Suppose that the price of a pound of coffee is $4 and that she has $56 to spend on coffee and tea. Write her demand curve for tea. Illustrate her demand curve. c) Suppose that the price of a cup of tea is $1 (the price of coffee and income remain $4 and $56, resp.). Use your demand functions to find her best bundle. In an indifference curve diagram illustrate her best bundle at these prices. For the remainder of the question, assume that her income rises to $60 and that the prices of coffee and tea are unchanged at = $4 and =1.
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		U(.) must be monotonically increasing in all possible bundles
		U(.) must be able to assign a utility to every possible bundle of goods
		For any two bundles, A and B, either U(A) ≥ U(B) or U(B) ≥ U(A) must be true
		For any three bundles, A, B, and C, if U(A) ≥ U(B) and U(B) ≥ U(C), then U(A) ≥ U(C)