Midterm1_2003

Midterm1_2003 - element x = x 1 x 2 and y = y 1 y 2 of X :...

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Introduction to Economic Analysis Fall 2003 Mid-term Exam: September 22 Time: 1 hour and 15 minutes. Try to answer all questions. Good luck! Question 1 (30 points) Let the utility function be: u ( x 1 ,x 2 ) = x 1 + x 2 1. Determine the demanded bundle as a function of the prices, p 1 and p 2 and the income, m . 2. Extra Points Draw the demand for good x 1 as a function of its price p 1 . Question 2 (30 points). Consider the preference relation on X = < 2 + defined as follows: for any
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Unformatted text preview: element x = x 1 x 2 and y = y 1 y 2 of X : x % y if and only if Max { x 1 ,x 2 } Max { y 1 ,y 2 } 1. Is this preference relationship complete ? 2. Is it transitive ? 3. Extra Points Are these preferences strongly monotonic ? that is, is it true that x 1 y 1 and x 2 y 2 , with at least one inequality strict, implies that x y ? 1...
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