Econ 431 Example Midterm 1

# Econ 431 Example Midterm 1 - Econ 431 Midterm 1 Fall 2011...

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Econ 431 Midterm 1: Fall 2011 Dr. Hansen Answer the following questions to the best of your ability. Do not provide irrelevant information. If a question seems ambiguous to you, state the most reasonable assumptions to resolve the ambiguity and proceed on that basis. Show your work and explain your reasoning. No calculators or notes are allowed. Feel free to write on the back of pages if you need more space, but label clearly which question you are answering. Good luck! I’m praying for you. 1. (15 points) The income distribution in the land of Zoram is as follows (where senines are a unit of currency): Income Number of Residents with Given Income 1 senine 6 2 senines 3 5 senines 4 6 senines 5 a. Calculate the Poverty Gap Ratio (PGR) and the Head Count Ratio (HCR) if the poverty line is 4 senines. b. Some have argued that calculating the average squared individual normalized distance from the poverty line (PGRSQ = (1/N)*∑[((z – y n )/z) 2 * I(y n <z)]) would give a better measure of the intensity of poverty than the PGR. Thinking in terms of utility, why might this be the case?

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2. (20 points) a. Define convergence b. If you were given a dataset to test for convergence: b.i. What variables should it include? Why?
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Econ 431 Example Midterm 1 - Econ 431 Midterm 1 Fall 2011...

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