midterm_fall2010

Midterm_fall2010 - Econ 51 Midterm Instructions This is a closed book closed-notes exam You are allowed to use a hand-held calculator(i.e no laptop

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Econ 51: Midterm October 25, 2010 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 . Please write the name of your TA and section time on each blue book. Note that throughout the midterm (and the class) log implies the natural logarithm. Always remember: think before you do the math ! Good luck! 1. Short questions (31 points) (a) (15 points; 3 points each) For each of the following vNM utility functions u ( x ) (with x > 0), do they represent risk averse preferences, risk neutral preferences, risk loving preferences, or neither? (i) u ( x ) = 24 x 2 + 9 x (ii) u ( x ) = exp(7 x + 18) (iii) u ( x ) = log( x ) + p x (iv) u ( x ) = 2 x + 22 (v) u ( x ) = x + log( x ) (b) (4 points) There are two goods ( a and b ). Rob’s utility function is u R ( a; b ) = a + b . Tom’s utility function is u T ( a; b ) = 3 a + 3 b . Jerry’s utility function is u J ( a; b ) = 10 a + 10 b . There are 10 units of each good. Describe the set of
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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.

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Midterm_fall2010 - Econ 51 Midterm Instructions This is a closed book closed-notes exam You are allowed to use a hand-held calculator(i.e no laptop

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