mid_three_302_part1.docx

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Name____________________________________ Teaching Assistant__________________________ Discussion Sec±on ±me_______________________________ Econ 302 Lecture 001, Third Exam, Part 1 Part 1 is worth 18 points All answers are to be wri²en on the exam pages. No books, notes, scratch pieces of paper, calculators, or wireless devices (including watches) are allowed. By taking this exam you agree to the Economics Department honor code.
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1. An employer ofers his or her employee the opTon oF shi±ing x units oF income From next year to this year. ²hat is, the opTon is to reduce income next year by x units and increase income this year by x units. a. (1 point) Would the employee take this opTon? Explain this both mathemaTcally and in words. b. (2 points) Determine, using the 2-period endowment economy graph From Chapter 9 (Williamson), how this shi± in income would afect the household’s consumpTon and savings decision in the current year. Explain your results.
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2.Consider an endowment economy as in Chapter 9 (Williamson).
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  • Fall '08
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