Econ3131
Spring 2007
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 closedbook. You may use a calculator (answers might not be whole
numbers).
Show your work. A complete answer to any part of a question must have an argument,
explanation or proof.
Good luck.
1
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentPart I
 Questions 1 and 2. (Consumer theory)
Question 1
(25 points.)
Mr. Woodcock consumes two goods
x
and
y
. His preferences for bundles of these two
goods are represented by the utility function
u
W
(
x;y
) = ln
x
+ 2 ln
y:
The price of
x
is
p
x
and the price of
y
is
p
y
= 1
:
His income is
m:
(b) If
p
x
= 3
;
at what income
m
0
will Mr. Woodcock demand
x
= 25?
(c) If
m
0
is the income level you found in part b, but
p
x
may vary ±nd Mr. Woodcock
x
.
(d) Mrs. Cardinal faces the same prices as Mr. Woodcock,
This is the end of the preview. Sign up
to
access the rest of the document.
 Spring '06
 MASSON
 Economics, Jay, Mr. Woodcock, income level mC

Click to edit the document details