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e360_apape_midterm1_review

e360_apape_midterm1_review - Econ 360 Midterm 1 REVIEW...

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Econ 360 Midterm 1 REVIEW Sep 16, 2008 Andreas Duus Pape Department of Economics Binghamton University email: [email protected] Office Hours: Wed 2-4pm or by app’t Phone: x72660 Office: LT 904 You are expected to do your own work and not to consult notes, books, or other resources. There are 7 questions for a total of 100 points. Good Luck! 1. Janice buys two things: Apples (a) and Bananas (b). Every week, she does the same thing: she spends all his money and buys ( a 1 , b 1 ) apples and bananas (respectively). Apples cost $1. Bananas cost $2. One day, Janice’s friend asks her which she likes more: one apple or one banana. She shrugged and said “About the same.” (a) (5 points) What is Janice’s weekly income? (b) (10 points) Assuming Janice is correct about her preferences in the second paragraph, can she change her consumption in the future to make herself better off? How? (For example: buy more apples and fewer bananas or the reverse.) Why? Explain. (Feel free to use a graph in your explanation.) 2. David (D) has the following demand curve for Quince (q), for income I D and for a price
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