MidtermSolutionQ1

# MidtermSolutionQ1 - ECO 310 Spring 2007 Microeconomic...

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Midterm Examination Important instructions: [1] This is a closed-book examination. Put away your books, handouts, notes, calculators, palmtops, cellular phones, : : : now. [2] Print your name and clearly. We won&t grade unreadable answers. [3] Answer each question is a separate book- let. [4] Write and sign the honor pledge ±²I pledge my honor that I have not violated the honor code during this examination." ±on the front cover of your answer booklet. [5] The examination is for 75 minutes. It will end PROMPTLY. Question 1: 40 minutes A consumer has indirect utility function U ( P x ; P y ; M ) = M 2 2 P x P y x ? Using Roy±s identity we can ²nd the Marshallian demand: x m = @U @P x @U @M = M 2 2 P 2 x P y M P x P y = M 2 P x ; y m = @U @P y @U @M = M

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MidtermSolutionQ1 - ECO 310 Spring 2007 Microeconomic...

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