practiceexam4-fall07

# practiceexam4-fall07 - ,0,0 Cornell University Department...

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,0 ,0 Cornell University Department of Economics Ani Guerdjikova Assistant Professor ECON 313 Intermediate Microeconomics Final Exam (Make-up) Fall 2006 Duration: 2 1 2 hours General Instructions: 1. This is a closed book exam. 2. The exam consists of four problems. Please answer all questions from all problems. 3. Each problem is worth 100 points. 5. Please answer each problem in a separate blue book. Indicate clearly which problem and which part you are working on. and provide a consistent answer.

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Problem 1 Mary is planning her vacation in Hawaii. She likes sailing and diving. An hour of sailing costs p s , an hour of diving costs p d . Mary’s preferences are given by the utility function: u ( x s ; x d ) = x s + 1 2 p x d , where x s is the amount of time she spends sailing and x d , the amount of time she spends diving. Mary has a budget of y to spend during her vacation. a) Derive the equation of Mary’s indifference curves. Draw several indifference curves in a graph. Derive Mary’s budget constraint and draw it in your graph. b)
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practiceexam4-fall07 - ,0,0 Cornell University Department...

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