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21011finalsample

# 21011finalsample - Econ 210A Sample questions...

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Unformatted text preview: Econ 210A Sample questions for &amp;amp;nal (Please note that these questions are mainly from the second part of the course. Questions from the &amp;amp;rst part of the course can be found in the sample midterm questions.) 1. Derive the Marshallian demands, Hicksian demands, expenditure func- tions, and indirect utility functions for the following utility function: &amp;amp; 1 q 1 &amp;amp; 1 q 2 2. A. De&amp;amp;ne the pro&amp;amp;t function in the neoclassical theory of production. B. Show that the pro&amp;amp;t function is convex in prices. 3. Consider an investor with wealth level W considering investment between a completely riskless asset that has rate of return r and another risky asset. A. How could one describe the range of outcomes for the risky asset? B. Set up the problem of the choice between the two assets under the assumption that the investor is an expected utility maximizer. C. Suppose the investor is risk neutral. Completely characterize the investors optimal choice as a function of the properties of the risky and riskless assets. D. Would a risk averse investor ever put all of her or his wealth in the risky asset? 4. Consider a pure-exchange economy with 2 agents ( 1 and 2) and two goods, x and y: Their utility functions are as follows U 1 ( x 1 ;y 1 ) = &amp;amp; 1 x 1 &amp;amp; 1 y 1 U 2 ( x 2 ;y 2 ) = &amp;amp; 2 x 2 &amp;amp; 2 y 2 where x i and y i denote consumption levels for agent i = 1 ; 2 : Suppose the initial endowments are e x 1 = 0 ;e y 1 = 4 ;e x 2 = 2 ; and e y 2 = 0 : A. De&amp;amp;ne a competitive equilibrium for this economy. B. Calculate a competitive equilibrium for this economy. C. Can you &amp;amp;nd an allocation other than the competitive equilib- rium allocation that is Pareto superior to the competitive equilibrium alloca- tion?...
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21011finalsample - Econ 210A Sample questions...

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