econ313prelim2spring06rev07

# econ313prelim2spring06rev07 - Econ313-1 Spring 2006 Talia...

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Econ313-1 Spring 2006 Talia Bar Prelim 2 This exam consists of four questions. Please answer questions 1 and 2 in one exam book and questions 3 and 4 in another exam book. You may add books if needed. Label your exam books clearly with your name and question numbers. The exam is worth 65 points. To help you allocate time you can plan on spending about one minute per credit point. The exam is closed-book. You may use a calculator (answers might not be whole numbers). Good luck. 1

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Part I - Questions 1 and 2. Question 1 (25 minutes) David consumes Avocados A and Rice R only. His preferences for bundles of these two goods are represented by the utility function u D ( A, R )= 1 4 AR 1 . 5 . The price of Avocados is p A and the price of Rice is p R =1 . His income is m = \$240 . (a) Find David’s Marshallian demand for Avocados. (b) How much will David consume from each good if p A =3? Assume now that due to shortage in the supply of Avocados the price of Avocados increases to p A =6
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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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econ313prelim2spring06rev07 - Econ313-1 Spring 2006 Talia...

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