198s2007.midterm.key

198s2007.midterm.key - Department of Economics, HKUST ECON...

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Department of Economics, HKUST ECON 198 Microeconomic Theory I Semester: Spring 2006/07 Tutor: Peter K. Tsui Office number: Room 2393 (ext.7597) Email: ecpeter@ust.hk Office hours: Thur 3:00p.m. – 5:00p.m. Note: This set of solutions serves only as guidelines for grading. Giving the same answers as suggested below is no guarantee of full credits. Detailed explanation is required. Midterm Examination (Solutions prepared by Peter Tsui) 1. (a) False. Preference is not the same as consumption. (b) False. Counterexample: is not monotonic but the preference relations are still transitive. In addition, the assumption that the good is quantifiable is needed when we talk about monotonicity. (c) True. Let m be the non-wage income and w be the reservation wage – the wage rate that makes people indifferent between working and not working. Since the wage rate ( w ) is initially smaller than the reservation wage ( w ), the unemployed person will likely remain unemployed after moving to Tuen Mun because of the additional traveling expenses ( c ) incurred. 0 1
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This note was uploaded on 04/03/2010 for the course ECON ECON198 taught by Professor Leungsiufai during the Fall '09 term at HKUST.

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198s2007.midterm.key - Department of Economics, HKUST ECON...

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