midterm_Spring2004

midterm_Spring2004 - Econ 51: Midterm April 27, 2004...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 51: Midterm April 27, 2004 Instructions: This is a closed book, closed-notes exam. You are allowed to use a hand-held calculator (i.e. no laptop) You have 110 minutes. Please answer all 3 questions. Please use a separate blue book for each question. Always remember: think before you do the math. Good luck! 1 True/False questions (36 points) For each of the statements below, indicate whether it is true or false, and explain. Explana- tions cannot exceed two sentences. Grading: You earn 3 points for each right answer; you earn 3 additional points for each correct explanation, which does not exceed two sentences. You lose 2 points for each incor- rect answer (no matter what the explanation is). You get zero points if you do not answer. Thus, if you do not know the answer you may be better o f not answering. (a) Let x and y be the consumption in two states of the world. The utility function u ( x, y )=10+2 x 2 +6 y 2 +21 y 3 +7 x 3 does not represent vNM preferences. (b) An individual with vNM utility v ( x )= e 7 x is risk averse. (c) There are apples ( a ) and bananas ( b ). Tom and Rob have identical utility function u ( a, b )=max( a, 15). There are 20 apples and 20 bananas on the island. Any point in
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/19/2011 for the course ECON 51 taught by Professor Tendall,m during the Winter '07 term at Stanford.

Page1 / 3

midterm_Spring2004 - Econ 51: Midterm April 27, 2004...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online