Econ_701_First_Exam_-_Practice - Econ 701 Microeconomics...

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Econ 701 Microeconomics – Mid term exam – Matthew Baker General Instructions: Please answer all of the following questions in your blue book. You have the entire class time (approximately 2 hours) to complete the exam. Be sure to mark your answers clearly and show all work. If you have to cross out mistakes or anything, please do so in such a way that I will not get confused in grading your exam! You may answer the questions in any order you choose, but once again, please take care in indicating where your answers to each problem are! Please hand in this exam sheet with your exam. Good luck! A warning: Part III is the most computationally intensive part of the exam. Part I: A Simple Problem in Consumer Theory Consider a consumer with utility function y x x U + - = ) ( β α and budget constraint y p x p I y x + = . 1. Find the demand and the compensated demand for good x . 2. Demonstrate that there are no income effects in the demand function for good x . Part II: Compensating Variation, Equivalent Variation, and Consumer’s Surplus.
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Econ_701_First_Exam_-_Practice - Econ 701 Microeconomics...

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