Econ 100A Mid2A WI07

# Econ 100A Mid2A WI07 - Econ 100A Microeconomics Winter 2007...

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Econ 100A: Microeconomics, Winter 2007, Dr. Famulari Midterm 2A: 250 Points Name_______________________________________ Student Number__________________ Question # Points Question 1: 60 points Question 2: 40 points Question 3: 85 points Question 4: 35 points Question 5: 15 points Question 6: 15 points Total points: 250

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1. (60 points) A change in the consumer’s economic environment has caused her optimal commodity bundle (X*(p x , p y , I), Y*(p x , p y , I)) to change from point A in the figure below to point B. 1A. (10 points) Which parameter has changed and in what direction? 1B. (30 points) Illustrate both the substitution and income effect of this change on X and Y. Carefully EXPLAIN your reasoning. 1C. (20 points) What is the definition of a normal good? Is X in the graph above a normal good? CAREFULLY explain your reasoning. Quantity of Y Quantity of X
Question 2 (40 points total) Toni gets utility from X and Y. Toni gets the exact same amount of happiness from consuming one unit of X as she does from consuming two units of Y. Suppose the price of X is \$30 and the price of Y is \$10.

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Econ 100A Mid2A WI07 - Econ 100A Microeconomics Winter 2007...

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