4010midterm - AP/ECON 4010 ADVANCED MICROECONOMIC THEORY...

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AP/ECON 4010: ADVANCED MICROECONOMIC THEORY MIDTERM EXAM Fall 2009 SECTION A: Short Answers. Explain briefly but clearly why each of the following statement is true, false or uncertain. Do any FIVE. 5 x 8 = 40pts 1. If marginal rate of substitution is diminishing then demand curve must be downward sloping. 2. Utility functions xy/(x + y) and xy represent identical preference. 3. If x and y are perfect complements then the Marshallian demand for each good must be I/(P x + P y ). 4. If the objective is to raise consumer welfare, income subsidies are better than price subsidies. 5. Both expenditure function and indirect utility function are homogenous of degree 1 in prices. 6. The sum of own price, cross price and income elasticities of demand for a good must add up to one. 7. If the utility of lottery outcomes is given by the VNM index, then consumer will always choose the lottery with the higher expected utility. SECTION B: Problems. Do any THREE.
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This note was uploaded on 09/01/2011 for the course ECON 4010 taught by Professor Mahmudulanam during the Fall '10 term at York University.

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4010midterm - AP/ECON 4010 ADVANCED MICROECONOMIC THEORY...

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