Econ 100B (Grossman)—Winter 2010
Practice questions for ﬁnal exam
With answers
March 9, 2010
If you can do the bluebook questions from the two midterms, plus these practice questions, you should
be in good shape for the bluebook/freeresponse section of the ﬁnal. The questions that will be on the exam
have been designed so that the numbers typically work out relatively “nicely”. I haven’t taken such care here,
so don’t be surprised or scared if you get less “nice” numbers.
1. Consider an exchange economy consisting of two people,
A
and
B
, endowed with two goods, 1 and 2.
The endowments are
ω
A
= (0
,
5) and
ω
B
= (5
,
5). Preferences are given by
U
A
(
x
1
,x
2
) =
x
2
1
x
2
and
U
B
(
x
1
,x
2
) =
x
1
x
2
. Find the competitive equilibrium prices and allocations.
Answer
:
x
A
= (10
/
7
,
5
/
3),
x
B
= (25
/
7
,
25
/
3) and
p
= (7
/
3
,
1) (or any scalar multiple of these prices).
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview.
Sign up
to
access the rest of the document.
 Spring '08
 KILENTHONG
 Economics, Firm, social optimum

Click to edit the document details