TakeHome Final ODDEVENEVEN
1
TakeHome Final Exam ODDEVENEVEN
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
Consider a twoperson pure exchange economy (Edgeworth Box) made up of the
following two households. The notation “min[
xy,
16]” means the minimum of
xy
and
16. Superscripts denote the household name — nothing in this problem is raised to
a power.
Household 1
Household 2
Endowment
r
1
= (1
,
9)
r
2
= (9
,
1)
Utility Function
u
1
(
x, y
) =
xy
u
2
(
x, y
) = min[
xy,
16]
1. Household 2 does not fulfill C.IV. Household 2 has a maximum utility of 16;
whenever household 2’s holdings of
x
and
y
fulfill
xy >
16, household 2 gets
no additional satisfaction from additional consumption.
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 Fall '08
 ZAMBRANO
 Microeconomics, Equilibrium, General equilibrium theory, consumption plan, Prof. Starr

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