Economics 148 – Sample Midterm Directions: You have 75 minutes to complete the exam. Please place your final answer in the space provided below. Partial credit will be given for work that is both carefully done and legible. Good luck! Problem A (20 points) – Welfare EconomicsConsider a pure exchange economy with two individuals (1 and 2), each of whom consumes food and drinks.U1 •DU2′food U2•A•B•CU1′drinks Individual 1 Individual 2 Indifference curves for individual 1 are labeled U1and U1′, while the indifference curves for individual 2 are labeled U2and U2′.
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