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Mid-Termv5 - IZMIR MICS TY OF EC Econ 201 Microeconomics...

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I Z M I R U N I V E R S I T Y O F E C O N O M I C S Econ 201 - Microeconomics Name: Midterm - 16 December 2008 Student No: Assist. Prof. Efe Postalcı Answer the following 3 multiple choice questions and 2 essay questions. Show all your calculations for the essay question. You have 100 minutes. PART I: Multiple Choice Questions (each 10 points). 1. Will spends his entire income on 8 sacks of acorns and 8 crates of butternuts. The price of acorns is 9 dollars per sack and his income is 88 dollars. He can just afford a commodity bundle with A sacks of acorns and B crates of butternuts that satisfies the budget equation (a) 9A + 4B = 88. (b) 18A + 4B = 176. (c) 11A + 2B = 88. (d) 9A + 6B = 90. (e) None of the above. 2. Hans has $27 which he decides to spend on x and y. Commodity x costs $16 per unit and commodity y costs $10 per unit. He has the utility function U ( x, y ) = 5 x 2 + 2 y 2 and he can purchase fractional units of x and y. Hans will choose
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