Econ 281B4Wi09 Fin_16

Econ 281B4Wi09 Fin_16 - Econ 281 Section B4 (T R...

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Econ 281 Section B4 (T R 9:30-10:50) Instructor: Valentina Galvani Winter 2009 Final Exam 23 April 2009 Exam Special Code 16 INSTRUCTIONS: 1. Complete the name, identification number and special code fields on the general purpose answer sheet. Answer sheets missing any of this information will not be marked. Answer the multiple choice questions on the general purpose answer sheet. There are 14 multiple choice questions, each worth 3 points for a total of 42 points. 2. There are four open problems. Answer in the space provided below and after each problem statement. 3. This exam is worth 80 points. 4. You have 2 hours and 50 minutes. 5. Print your name and student identification number in the space below. Student Name (PRINT)____________________________________ I.D. # _____________________________________ Good luck !

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1. 2. The inverse demand for DVDs is P=25-0.5*Q. The market price is set at \$10. The consumer surplus of the 30 th DVD is ______? a) 5 b) (15*30)/2= 225 c) Zero d) 15 3. Consider Gary’s utility function: U(X,Y) = 2 X 2 Y, where X and Y are two goods, and MU X =4YX, MU Y =2X 2 . Derive Gary’s demand for X if his income is \$I. For simplicity, assume P Y =1. a) X=2I/(3P X ) b) X=I/(2P X ) c) Not enough information to answer the question d) X=(I- P Y Y)/ P X 4. John buys one (1) belt for each three (3) pairs of jeans he purchases. In economics terms, John consumes in fixed proportions belts (denoted by B) and jeans (denoted by J) and for each belt he consumes three jeans. Assume that the price of a belt is \$60 and the price of jeans is \$50. Then: a) John’s Engle curve for Belt is the straight line I=(230/3)B in a graph with I on the vertical axis and B on the horizontal axis. b) John’s Engle curve for Jeans is the straight line J=(3/230)I in a graph with J on the vertical axis and I on the horizontal axis. c) John’s Engle curve for Belt is the straight line I=210B in a graph with I on the vertical axis and B on the horizontal axis. d) John’s Engle curve for Belt is the straight line J=3B in a graph with J on the vertical axis and B on the horizontal axis. 5. Consider an inter-temporal (two-period) capital market in which consumers can lend and borrow at the net interest rate r . A consumer receives income \$100,000 in period 1 and \$40,000 in period 2. The intercept of the corresponding inter- temporal budget line with the axis of period 2 consumption is:
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This note was uploaded on 10/04/2011 for the course ECONOMICS 281 taught by Professor Vg during the Spring '09 term at University of Alberta.

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Econ 281B4Wi09 Fin_16 - Econ 281 Section B4 (T R...

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