Sample First Term Test

# Sample First Term Test - UNIVERSITY OF WATERLOO Department...

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UNIVERSITY OF WATERLOO LAST NAME ONLY (in UPPER CASE ): Department of Economics Professor J. Cuenca Initials (no ID# here): Economics 201, Section 02 (Spring 2008) Term Test (40%) MARKS A: / 4 PLEASE CIRCLE the "B" question answered: 1 or 2 or 3 B: / 8 C: /24 D: / 4 PLEASE CIRCLE the 8 "C" questions answered: 1 2 3 4 5 6 7 8 9 10 11 12 Only a ruler is allowed. You may use the back of the pages for preliminary sketches or calculations, but we will read and mark the page fronts only. _________________________________________________________________________________________ ___ PART A ( 4 points out of 40 ): Please solve the following problem in the space provided. A-1. A person's utility function is TU = XY. The given prices are P x = \$3 and P y = \$1 [in case you have no calculus background: MU x = Y and MU y = X]. Please answer these 2 questions using the same procedure that was suggested in the Take-Home Test: (a) Find the demand equation for good X [Hint : begin by maximizing total utility and do NOT replace P x and P y with their given values; don't forget also to use the equation of the budget line]. (b) Find the equation of the income consumption curve.

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

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Sample First Term Test - UNIVERSITY OF WATERLOO Department...

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