2009-midterm - Stanford University Department of Management...

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Unformatted text preview: Stanford University Department of Management Science and Engineering MS&E 241 Economic Analysis Midterm Exam Winter 2009 Thursday, February 12, 2009 This is a closed-book exam . You will have 90 minutes to complete it. Use the point totals listed below to allocate your time appropriately. Please write all answers and supporting work in your answer booklet. The only aids allowed are two double-sided sheets of letter-sized paper with your handwritten notes, and a standard calculator. You must return the question sheet with the answer booklets. The distribution of points for the three questions in this exam is as follows: Question 1: 30 points Question 2: 35 points Question 3: 35 points Total: 100 points Good luck! I hereby certify that this exam is based solely on my own efforts, and is otherwise also in accordance with the Stanford Honor Code . Name: ................................................. Signature: ........................................... 1 Problem 1 (30 Points) Joels preferences for the consumption of food ( x 1 ) and clothes ( x 2 ) are rep- resented by the utility function u ( x 1 ,x 2 ) = x 1 / 3 1 x 2 / 3 2 , for all possible consumption bundles x = ( x 1 ,x 2 ) in the choice set R 2 + . Assume that Joel spends all of his disposable income y > 0 on food and clothes. (i) Are Joels preferences for food and clothes rational? Explain briefly ....
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This note was uploaded on 05/06/2010 for the course MSE 211 at Stanford.

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2009-midterm - Stanford University Department of Management...

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