final08 - YORK UNIVERSITY Arts Economics 2300 D: Barry...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: YORK UNIVERSITY Arts Economics 2300 D: Barry Smith Final Exam Fall 2008 Instructions . The exam consists of 1 part, Part A. Part A contains choice. You must do 5 of the 6 questions. Each question is worth 20 marks. You have 3 hours to complete this exam so, roughly speaking, you have 36 minutes to answer each question. Write your answers in the exam booklets that have been supplied to you. Be sure to provide the information requested at the front of the exam booklets. Part A Answer 5 of the following 6 questions. Each is worth 20 marks. 1. Suppose that an agent has standard preferences with a diminishing marginal rate of substitution. There are two goods: x 1 and x 2 with prices p 1 and p 2 . The income of the agent is M. Suppose that good 2 is inferior. (a) Show the consumer equilibrium on a carefully labelled diagram. Ex- plain why the point that you show is an equilibrium. (b) Suppose that the price of good 1 ( p 2 ) increases. Explain the income and substitution effects and illustrate them using a carefully labelled...
View Full Document

This note was uploaded on 04/17/2010 for the course LAPS ECON2350 a taught by Professor Barrysmithandtasso during the Spring '10 term at York University.

Page1 / 2

final08 - YORK UNIVERSITY Arts Economics 2300 D: Barry...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online