midterm4

Intermediate Microeconomics: A Modern Approach, Seventh Edition

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MIT 14 . 04 Intermediate Microeconomie Theory Fall 2005 Exam #1 Instructions Answer each of the four problems on a seperate piece of paper. You will have 1.5 hours to complete the exam. Problem 1 ( 30 minutes ) Consider a consumer with a utility function u Ω x 1 , x 2 æ : e Ω x 1 + ln Ω x 2 ææ 1/3 (3 points) a) What properties about utility functions will make this problem easier to solve? (3 points) b) Which of the non negativity input demand constraints will bind for small m? (10 points) c) Derive for the marshallian (uncompensated) demand functions and the indirect utility function. (3 points) d) Derive the expenditure function in terms of original utils u . (6 points) e) Suppose that there are 5 people in the economy each with endowments m i , i : 1,2,3,4,5. i) Suppose that m i ; p 1 - i . Construct the aggregate demand function for x 1 and x 2 . What properties do the individual demand functions have that simplifty this problem? ii)
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midterm4 - MIT 14.04 Intermediate Microeconomie Theory Fall...

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