TAI SOLARIN UNIVERSITY OF EDUCATION, IJEBU – ODE

DEPARTMENT OF ECONOMICS
ADVANCED MICRO ECONOMIC THEORY (ECO.421)
Session: 2022/2023

Review Quiz (Submission: 3PM, Friday, 05-07-24)

QUESTION 1

(i) Comprehensively compare the Marginal utility and Indifference curve school of
thoughts approaches to utility measurement.
(ii) Establish whether the function Z ( x , y )=3 x3 +1. 5 y 2−18 xy +17 is at a relative
maximum, minimum, inflection or saddle points

QUESTION 2

(i) A consumer has the utility function over goods x , y such that,u=u ( x , y )=12 x 2 y 4. Let
the price of good X be given by P x, and Y by P y and let income be given by M .
(ii) What is the slope of the consumer’s indifference curve at the consumption bundle,
(1,1)
(iii) Derive the consumer’s ordinary demand function for goods x and y.
(iv) If we have P x = ₦ 2, P y = ₦ 2, and M = ₦ 24, compute the utility maximizing
consumption bundle.

QUESTION 3
(i) Indifference curves could be convex, linear, or right angled. What does each of these
shapes tell you about the nature of the Utility function? What does each of these shapes
tell you about the MRCS?
(ii) Using any three features, compare and contrast the Cobb-Douglas and the Linear
Homogeneous Production Function.