Summer07Exam1(2)

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

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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 a. 6.50. b. 5. c. 2.75. d. 3.75. e. It is not possible to determine the Paasche price index without further information. ____ 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 a. 4 apples. b. 13 apples. c. 8 apples. d. 16 apples. e. None of the above. ____ 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, a. there will be no change in the demand for hollyhocks. b. the income effect of the change in demand for delphiniums will be bigger than the substitution effect. c. of the change will be due to the income effect. d. the entire change in demand for delphiniums will be due to the substitution effect. e. of the change will be due to the income effect. ____ 5. Donald consumes goods x and y . His utility function is U ( x , y ) = xy 3 . He is endowed with 10 units of x and 15 units of y . The price of x is $1 and the price of y is $2. Find his net demand for x . a.
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This note was uploaded on 06/22/2009 for the course ECON 134a taught by Professor Lim during the Spring '08 term at UCSB.

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

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