{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Review Questions for the First Term Test

Review Questions for the First Term Test - UNIVERSITY OF...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
UNIVERSITY OF WATERLOO -- Department of Economics -- Professor J. Cuenca Economics 201-02: Review Questions for the First Term Test - Spring 2011 1. "Of two downward-sloping and parallel demand curves, the one further to the right has a smaller price elasticity at each quantity". True or false? Prove with explicit use of the formula of point price elasticity. 2. List three variables that we hold constant as we draw an Engel curve [HINT: some of the "shift factors" behind the demand curve also are "shift factors" of the Engel curve]. 3. (a) Without using indifference-curves or exchange theory, prove that, in equilibrium with only 2 consumers and 2 commodities, the MU x /MU y for consumer A must equal the MU x /MU y for consumer B. [ Hint : assume that both consumers A and B pay the same given prices P x and P y ]. (b) Use the equilibrium condition in (a) to explain why, if the MU x /MU y for consumer A is smaller than the MU x /MU y for consumer B, both can gain if consumer A gives up one unit of X in exchange for more Y from consumer B. [
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern