Ec101F10FinalV2_101206

Ec101F10FinalV2_101206 - Copi c, Ec101, Fall 2010, Final,...

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Unformatted text preview: Copi c, Ec101, Fall 2010, Final, 12/06/2010. Version 2 There are 26 multiple-choice questions and one essay question. You have 160 minutes to answer these questions. The questions have appropriate indications as to whether they are easy, medium, or hard. The essay question is worth 5 points, and each of the multiple-choice questions is worth 1 point. There are two extra-credit questions (hard questions), so 29 points are enough for 100%. Important! READ the questions and answers carefully so that you do not make unnecessary mistakes, and so you can do your best! Do not try to cheat - you cheat yourself and others, and if you are caught, you get in trouble. 1 Text E . ( General equilibrium ) There are two islands: on the first island there live a great number of inhabitants, all of whom are called George; on the second island there live a great number of inhabitants, all of whom are called Jeremiah. There are only two commodities that occur naturally on the two islands, red wine and green tea, but on the second island red wine is more easy to find than on the second one (green tea is equally easy to find on both islands). More precisely, each George starts with an endowment (in ounces) x G = 3 of red wine, and y G = 4 of green tea; each Jeremiah starts with an endowment (in ounces) x J = 1 of red wine and y J = 10 of green tea. Prior to consuming them, all the inhabitants of both islands may trade their endowments in a free market (on a very large vessel parked right in the middle between the two islands). From consuming a quantity x of red wine and y of green tea, each George gets a utility u G = x 1 4 y , and each Jeremiah gets a utility u J = xy . 2 Problem 1. (easy) Popeye is facing several choice problems. He is never moody, and the conditions in the environment around him never change. In which of the following cases are his choices consistent (the alternative that he chooses is on the right-hand side of the arrow)? a. { ocean,ski,relax } ocean , { ski,relax } ski , and { ocean,ski } ski . b. { ocean,ski,relax } ocean , { ski,relax } relax , and { ocean,ski } ocean . c. { ocean,ski,relax } ski , { ski,relax } relax , and { ocean,ski } ski . d. { ocean,ski,relax } ocean , { ski,relax } relax , and { ocean,ski } ski . Problem 2. (easy) Olivia would like to figure out how much, in terms of money, Popeye approximately likes spinach, and she knows he likes spinach. Popeye is never indifferent. Neither Olivia nor Popeye bother thinking about cents, and Popeye is frugal so he doesnt like anything more than $3. Which of the following collections of choices would surely accomplish that for Olivia?...
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Ec101F10FinalV2_101206 - Copi c, Ec101, Fall 2010, Final,...

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