sample midterm1 - Economics 360B: Microeconomic Theory...

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Economics 360B: Microeconomic Theory State University of New York at Binghamton Department of Economics Spring, 2007 Midterm I Version A The exam is worth 100 points. Each question (six questions on one page) is of equal value. There will be no communication with the exam proctors; if you believe a question contains an error or ambiguity, say so on your written examination, make an assumption to correct the alleged error or to resolve the ambiguity, and answer the question as well as you can. [1] The MRS of food (vertical axis) for shelter (horizontal axis) measures the amount of food that must be received in order to absorb the loss of 1 unit of shelter without losing utility (do not assume that these goods are perfect substitutes). If that value is 1, if the price of food is 10, and if the shelter price is 5, then the consumer is not maximizing their utility. Sketch a budget line, assuming the consumer has $500 to spend, and draw in a possible indifference curve that illustrates the situation described here.
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This note was uploaded on 05/01/2011 for the course ECON 102 taught by Professor Erus during the Fall '09 term at Boğaziçi University.

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