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Unformatted text preview: TakeHome Final EVENEVENEVEN Answer Key 1 TakeHome Final Exam EVENEVENEVEN Answer Key This exam is takehome, openbook, opennotes. You may consult any published source (cite your references). Other people are closed. The exam you turn in should be your own personal work. Do not discuss with classmates, friends, professors (except with Prof. Starr or Ms. Fried — who promise to be clueless), until the examination is collected. Please use a blue book. There are four questions. Answer all questions fully. State clearly any additional assumptions you need. 1 The proof of the First Fundamental Theorem of Welfare Economics (Theorem 19.1) uses either (i)the combined assumption of nonsatiation (C.IV) and convexity (C.VI (C)) or (ii) the assumption of weak monotonicity of preferences (C.IV*). These assumptions are designed to assure local nonsatiation of preferences. That is, nearby to every point in x ∈ X i there is x prime ∈ X i so that u i ( x prime ) > u i ( x ). Thus there are no thick indifference curves (zones of satiation). This ensures that for each household i ∈ H , the household spends fully up to the limits of its income p ◦ · w ◦ i = M i ( p ◦ ) = p ◦ · r i + summationdisplay j α ij ( p ◦...
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 Fall '08
 ZAMBRANO
 Microeconomics, Equilibrium, Prof. Starr, Final EVENEVENEVEN Answer, EVENEVENEVEN Answer Key

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