100b practice questions for final (1)

100b practice questions for final (1) - Econ 100B...

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Econ 100B (Grossman)—Winter 2010 Practice questions for final exam With answers March 9, 2010 If you can do the blue-book questions from the two midterms, plus these practice questions, you should be in good shape for the blue-book/free-response 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).
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This note was uploaded on 03/17/2010 for the course ECON 100B taught by Professor Kilenthong during the Spring '08 term at UCSB.

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100b practice questions for final (1) - Econ 100B...

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