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Unformatted text preview: Economics 2300 D: Barry Smith Midterm Exam Fall 2005 Instructions . The exam has four parts: A, B, C and D. Part A contains choice and is worth 12 points. Part B, worth 8 points, contains no choice. Part C is worth 12 points and contains no choice. Part D is worth 8 points and contains choice. Answer all questions in the booklet provided. Part A Do 3 of the following 5 questions. Each is worth 4 marks. 1. Explain when an equilibrium is efficient in the sense of Pareto. 2. Why is there an equilibrium at the point where Demand and Supply curves cross? 3. Suppose that a consumer had indifference curves that were ‘thick’. To draw them, just draw a regular indifference curve and then make it wider. What assumptions are violated by these preferences? Could we still have a consumer equilibrium? 4. Use the standard assumptions to prove that indifference curves cannot cross. 5. Suppose that a consumer has a utility function: U ( x 1 ,x 2 ) = x 1 x 2 ....
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- Spring '10
- Consumer, x2 x2