105final2004

105final2004 - Economics 105 Final- 2004 Name: Discussion...

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Unformatted text preview: Economics 105 Final- 2004 Name: Discussion Section: Directions: You have three hours to complete the exam. There are 120 points on the exam. Make sure you answer all eight questions. You must explain your answers for full credit. 1. (8 pts) 2. (8 pts) 3. (12 pts) 4. (14 pts) 5. (22 pts) 6. (22 pts) 7. (14 pts) 8. (20 pts) 1 1. Michael consumes candy and bionicles. Michael has had the same allowance for the past year. However, while the price of bionicles has stayed the same, the price of candy has recently risen. Michael argues that his allowance should increase such that he could consume the same bundle as before the price change. Show graphically why Michaels proposal may lead to him being over- compensated for the price change (put candy on the x-axis). When would Michaels proposal not be an over-compensation? (8 points) 2 2. Ellie consumes umbrellas (so she can be like Mary Poppins) and dresses. However, she is only three years old so youre a little concerned that she is not making rational decisions. On day 1,three years old so youre a little concerned that she is not making rational decisions....
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105final2004 - Economics 105 Final- 2004 Name: Discussion...

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