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Cornell University
Department of Economics
Ani Guerdjikova
Assistant Professor
ECON 313
Intermediate Microeconomics
Final Exam
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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View Full DocumentProblem 1
Pit eats only hotdogs with ketchup. His preferences are given by the utility function:
u
(
x
h
;
x
k
) = min
f
x
h
; 5
x
k
g
,
where
x
h
is the amount of hotdogs and
x
k
, the amount of ketchup he consumes. The
price of ketchup is
p
k
p
h
. This week, Pit has planned to spend
y
dollars on hotdogs and ketchup
.
a)
Derive Pit’s marginal rate of substitution between hotdogs and ketchup whenever
possible. Draw several of his indifference curves in a graph. Derive his budget con
straint and draw it into your graph.
b)
in an optimum. Illustrate Pit’s optimal decision in a graph. Derive Pit’s demand for
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 Fall '06
 MASSON
 Economics, Microeconomics, Mario, pit, Luigi, Derive Pit

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