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Unformatted text preview: Economics 105 Quiz 1 February 8, 2006 Name: Discussion Section: It is 8:15 on Monday night and an email arrives saying no TAs have shown up for the review session. Prof. Arcidiacono makes a break for the minivan instructing his dear wife to get directions to the LSRC and at the same time put his four boys to bed. The boys, sensing an opportunity, begin to wreak havoc.... You have seventy-five minutes to complete the quiz. Be sure to get to all five questions. Explanations are required for all answers with the exception of problem 1. 1. (16 pts) 2. (13 pts) 3. (12 pts) 4. (14 pts) 5. (20 pts) 1 1. Joshua (age 6) enjoys attacking Daniel (18 months) and Andrew (3 1/2). His utility function is U ( x, y ) = xy where x is attacking Daniel and y is attacking Andrew. The price of x is $2 while the price of y is $3. Joshua has $180 to spend (he is a very well compensated six year old). a) Solve for the optimal amount of x and y given the current prices and income. (4 pts) b) With Mom distracted, the price of attacking Daniel,...
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