Prelim1Review06_Fall03 - Economics 313-1 Talia Bar Cornell...

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Economics 313-1 Cornell University Talia Bar Fall 2003 Midterm Exam Question 1. (25) Consider the utility function: A. Which set of indifference curves most closely describes this set of preferences? B. What is the consumer’s choice if the price ration is P x /P y = 3 and income is m?
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Question 2 (25) Two options are available to golfers at the local public course: (i) Pay $10 for each round of golf played (ii) Pay an up-front membership fee of $100 and then pay $5 for each round of golf played. Joe loves to play golf and has $300 to devote to rounds of golf (G) and consumption of all other goods (denoted by the composite, C). The price of a unit of composite consumption is P C = $1. A. Draw Joe’s budget constraint under options (i) and (ii). For option (ii) assume he did not pay the 100 yet. So if he consumes nothing, he does not need to pay this amount. B. Joe’s utility function is u(G,C)=GC. Find his optimal consumption bundle under each option.
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This test prep was uploaded on 02/23/2008 for the course ECON 3130 taught by Professor Masson during the Spring '06 term at Cornell University (Engineering School).

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Prelim1Review06_Fall03 - Economics 313-1 Talia Bar Cornell...

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