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Unformatted text preview: Econ 510a (second half) Yale University Fall 2004 Prof. Tony Smith FINAL EXAMINATION This is a closed-book and closed-notes exam. You have three (3) hours to complete the exam. There are four (4) questions on the exam for a total of 100 points. The points allocated to each question are indicated below. Please put the answer to each question in a different blue book. To receive full credit, you must provide convincing explanations to support your answers. Please write as neatly as possible. 1. (25 points) Consider an exchange economy with two (types of) consumers (labelled A and B ), three time periods (labelled 0, 1, and 2), and a single good in each period. Consumer A is endowed with 4 units of the good in each of the three time periods, while consumer B is endowed with 0 units of the good in period 0, 12 units of the good in period 1, and 0 units of the good in period 2. The consumers endowments are not storable. The two consumers value consumption streams according to: 2 t =0 t u ( c i t ), where c i t is the consumption of consumer i in period t and (0 , 1). The felicity function u is strictly increasing and strictly concave. (a) Carefully define a competitive equilibrium with date-0 trading (i.e., an Arrow- Debreu equilibrium) for this economy....
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This note was uploaded on 11/01/2008 for the course ECON 387 taught by Professor Corbae during the Spring '07 term at University of Texas at Austin.
- Spring '07