Summer07Exam1(2)

Summer07Exam1(2) - Final ECON 100A Professor Raymundo...

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Final, ECON 100A, Professor Raymundo Rodriguez, Summer 2007 Bubble-in your Name, Perm #, and Test Version (see top-right corner) on your scantron. Identify the choice that best completes the statement or answers the question. ____ 1. When the prices were ($4, $1), Maria chose the bundle ( x , y ) = (8, 6). Now at the new prices, ( p x , p y ), she chooses the bundle ( x , y ) = (7, 9). For Maria’s behavior to be consistent with the weak axiom of revealed preference, it must be that a. p y = 4 p x . b. 4 p y < p x . c. 3 p y < p x . d. p x < 3 p y . e. None of the above. ____ 2. On the planet Hyperion, every consumer who has ever lived has a utility function U ( x , y ) = min{ x , 2 y }. The currency of Hyperion is the doggerel. In 1850 the price of x was 1 doggerel per unit and the price of y was 2 doggerels per unit. In 2000 the price of x was 11 doggerels per unit and the price of y was 4 doggerels per unit. The Paasche price index of prices in 2000 relative to prices in 1850 is ____ 3. Charlie’s utility function is x A x B . The price of apples used to be $1, the price of bananas used to be $2, and his income used to be $40. If the price of apples increased to $5 and the price of bananas stayed constant, the substitution effect on Charlie’s apple consumption would reduce his consumption by ____ 4. Maude thinks delphiniums and hollyhocks are perfect substitutes, one for one. If delphiniums currently cost $2 per unit and hollyhocks cost $3 per unit and if the price of delphiniums rises to $7 per unit, ____
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