Review Questions for the First Term Test

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

Info iconThis 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
Background image of page 1

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

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

This note was uploaded on 10/02/2011 for the course ECON 201 taught by Professor Vandewaal during the Spring '09 term at Waterloo.

Page1 / 2

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

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online