36396_10052603024214 - Advanced Microeconomic Theory I Fall...

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Advanced Microeconomic Theory I Fall 2009 Midterm Exam 11/1/2009 Answer all three questions. Write clearly and show all steps. I prefer English, but you may answer in Chinese if you feel it would help. The numbers in brackets are points for each question. p and income I is x ( p; I ) . We know that Dangdang always uses up her income. Hence, px ( p; y ) = y to choose a consumption bundle x 2 < n + such that u ( x ) u for some objec- tive function u ( : ) that is increasing in x . She does so by o±ering Dangdang an allowance y and imposing a per-unit tax z i of good i i if z i is negative.) Dangdang has no other source of income, and is e±ectively facing a budget constraint ( p + z ) x = y . De²ne f ( p; u ) ± min z;y ( y ² zx ( p + z; y )) s.t. u ( x ( p + z; y )) u as the minimum expenditure that Fengfeng needs to achieve her goal. (a) (20) Is
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This note was uploaded on 10/23/2011 for the course ECON 501 taught by Professor Zobuz during the Spring '11 term at Istanbul Technical University.

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36396_10052603024214 - Advanced Microeconomic Theory I Fall...

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