ReviewFinal2Spring06_ExtraCredit - Economics 313-1 Talia...

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1 Economics 313-1 Cornell University Talia Bar Spring 2006 You may use this as an extra credit assignment. If you do, hand it in to Koralai by May 11. You may get up to 1.5 points of credit towards the final weighted course grade. This is about equivalent to a full grade on a problem set or to 3/10 points on a quiz. There are no late submissions. A solution will be posted shortly on May 12. Review 2 for Final Examination This exam consists of three sections. Answer each section in a separate blue book and label each blue book clearly. The exam is worth 140 points. You will have 150 minutes (2.5 hours) to complete it. Allocate your time wisely between the sections. The exam is closed-book, but you may use a calculator. Good luck. Section I (50 minutes) Question 1 Central High School (CHS) has $60,000 to spend on computers (C) and a composite of other stuff (X). Prices of these two commodities are P C = P X = $1. CHS has preferences for computers and other stuff that can be represented by U(C,X)= CX 2 . In order to encourage A computer literacy in high schools, the State Education Commission is considering the following four plans: Plan A: Give a grant of $10,000 to each high school in the state that the school could spend as it wishes. Plan B: For every $1 that the school spends on computers, the state will give it 50 cents (i.e., a matching grant ). Plan C:
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ReviewFinal2Spring06_ExtraCredit - Economics 313-1 Talia...

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