First Midterm F07

First Midterm F07 - ECONOMICS 211 FIRST MIDTERM EXAMINATION...

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ECONOMICS 211 FIRST MIDTERM EXAMINATION, Fall 2007 (2 hours, 100 points) Circle the name of your instructor: Blazek Ergen nal İ Muthitacharoen Soligo You NAME: __________________________________________________________________________ PLEDGE:_______________________________________________________________________________________ _________________________________________________________________________________________________ _________________________________________________________________________________________________ PART 1: MULTIPLE CHOICE: Circle the correct answer (3 points each; 18 points in total) 5. Suppose at the current bundle he is consuming, Ibrahim obtains 10 units of satisfaction from the last pound of steak consumed and 6 units of satisfaction from the last piece of chicken consumed. The price of steak is $5 per pound, and the price of chicken is $2 per piece. Given the above information, which of the following is true? a) Ibrahim is maximizing his utility at this current bundle. b) Ibrahim should buy more chicken in order to maximize utility. c) Ibrahim should buy more steak in order to maximize utility. d) Whether he is maximizing his utility or not at this current bundle cannot be determined, since we do not know his utility function. 1
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PART II: TRUE OR FALSE, EXPLAIN (16 points in total) !!!!! Writing only “true” or “false” will NOT receive any credits !!!!! 7. (4 points) David is indifferent between a bundle of three apples and one orange and a bundle of three oranges and one apple. If David has diminishing marginal rate of substitution of apples for oranges, he will prefer a bundle of two apples and two oranges to the other two. True or False? Explain using a diagram. 8.
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This note was uploaded on 12/07/2009 for the course ECON 211 taught by Professor Na during the Fall '08 term at Rice.

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First Midterm F07 - ECONOMICS 211 FIRST MIDTERM EXAMINATION...

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