380 Midterm 2 final

380 Midterm 2 final - Midterm II-Econ 380-Sections 2 and 3...

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Midterm II-Econ 380-Sections 2 and 3 Name_______________________ W2010 R. Pope Notation is as in class. U is utility, V is indirect utility, x and y are two goods with respective prices: and and I is income. Total points=140. Use graphs and formulae. TFU is true false and uncertain meaning the argument is more important than which of T,F,U you choose. 1. John’s own (ordinary)-price elasticity of demand for skiing is -.8. His budget share for skiing is currently .3 and he has determined if he received 1% additional income, he would spend .9% of it on skiing. (10) a. What is John’s compensated own-price elasticity of demand? (10) b. Why and by how much is the compensated demand elasticity different from the ordinary price elasticity of demand. (10) c. Explain the meaning of an Engel curve and give the general slope of John’s Engel curve for skiing. (5) d. If ski resorts John attends lower skiing prices, will John’s expenditures on on skiing rise or fall? Explain.
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(10) 2. During his first year of school, Alma buys eight new college textbooks at a cost of $50
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This note was uploaded on 04/07/2011 for the course ECON 380 taught by Professor Showalter,m during the Winter '08 term at BYU.

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380 Midterm 2 final - Midterm II-Econ 380-Sections 2 and 3...

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