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Midterm 1 Key for Sorensen.PDF - Adobe Acrobat Professional

# Midterm 1 Key for Sorensen.PDF - Adobe Acrobat Professional...

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5ea 6rnh 1. o 3. Econ 1,O2a Winter 2008 Midterm Exam Name: Kcy You have 100 minutes to complete the exam. Calculators are not allowed; express numbers in the simplest terms if you don't know the numeric answer (i.e. OK to write tD). You should have nothing on your desk but this exam and a couple of pens. Good luck. 1. Short Answer Question (60 points): (a) Grant consumes only two goods: graham crackers (r1) and ramen noodles (22). Initially, his income is \$100, the price of graham crackersis \$1, and the price of ramen noodles is \$2 (14 points). Write dow_n the budget constraint (3 point). rn the ",X #,lXfJJ::-d ,,Graph Area,,, draw the budget constraint (3 point). Grant's indy band starts getting a lot of airplay on Power104.3, in Buenos Aires Argentina. Flom the residualshe earns from this, his income now increases to \$400. Write down tJre new budget constraint (2 point). 5u \$v\ Afraw,l#J t't Xa;jJ:* o,':".uon Area,, (2 point) 5. Later, there is a sudden reduction in the supply of ramen noodles in Morn- ingside Heights, where Grant lives. The price rises to \$4. Write down the

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Midterm 1 Key for Sorensen.PDF - Adobe Acrobat Professional...

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