e3101exam1 - Intermediate Microeconomics(Econ 3101 Exam 1...

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Exam 1 Instructions : Write your name on the back of the exam. Answer all parts of all questions, and show work. Exactly 120 minutes will be provided to complete the exam. Notes, books, computers, cell phones, or communications devices may not be used. Calculators may be used. Communication with other students is not permitted. The test has 7 pages and 150 possible points. 1. [20 points] Consider a model with two periods, each with one composite consumption good. Prices are the stable and normalized to 1. Suppose a consumer is endowed with income 20 in the first period and 60 in the second period. The consumer receives a 10% interest rate on savings and is subject to a 20% interest rate on borrowing. Regulations prohibit the consumer from borrowing more than 20. (a) Find this consumer’s intertemporal budget constraint. (b) Carefully graph the budget set. Label all intercepts. 1
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e3101exam1 - Intermediate Microeconomics(Econ 3101 Exam 1...

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