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Exam 1 - Take Home Component - Answers

# Exam 1 - Take Home Component - Answers - Midterm Exam Eco...

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Unformatted text preview: Midterm Exam Eco 701 - Fall 2009 Take Home Question General Instructions: Please answer the following questions thor- oughly and neatly on a nice sheet of paper. Specific instructions: 1. You are to work on this problem independently. Do not work on this with others in the class or otherwise ask anyone for help with these problems. This sort of collaboration will be deemed to be cheating and you will receive a failing grade in the course if caught. 2. You may, however, consult any other sources you like (web, text, etc.) in doing the problem. 3. Hand in your completed take-home problem with your in-class exam next Tuesday. A consumer has utility function: U = 2( x- 1)( y- 2) (1) 1. Find the consumer’s demand functions for goods x and y . Answers: Using the standard methods, one gets: y * = 1 2 parenleftbigg I p y + 2- p x p y parenrightbigg , x * = 1 2 parenleftbigg I p x + 1- 2 p y p x parenrightbigg 2. Find the consumer’s indirect utility function and expenditure function....
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Exam 1 - Take Home Component - Answers - Midterm Exam Eco...

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