Buyer Theory and Demand Curve
GSI identity: ______________________ Section #: __________________________
PRACTICE MIDTERM I
The allocated coming back the exam is 80 minutes. No exts will be awarded.
Before you turn in the exam, make sure that your name AND SID have reached the top with the page, along with your GSI's term.
By taking this examination, you recognize that the make use of outside materials is certainly not permitted. Any individual caught using outside materials, including your the next door neighbor's exam, can get 0 factors on the test.
Prior to starting working, see the questions properly.
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ALL THE BEST!
Mark whether or not the following statements are authentic or bogus. No justification needed.
1 ) The presumption of " More can be better” means that marginal electricity is never adverse.
2 . An individual's Engel competition can be created from the price-consumption curve. THE CASE
three or more. " U. S. A. should reform its healthcare system” is a good example of a positive statement. THE CASE
4. Consumer excess is a cardinal measure.
five. The replacement effect procedures the effect of any price alter on usage, keeping utility constant.
six. The paid for demand contour is steeper than the uncompensated demand curve when a great is normal.
7. An increase in cash flow will move the Engel curve to the right.
8. The assumption of decreasing marginal electricity is violated for perfect substitutes.
being unfaithful. The slope of the not caring curve lets us know how much money we should forgo to be able to buy one even more unit of good X.
10. Daniel eats pizza (x-axis) and sushi (y-axis). The buying price of pizza can be $3 a slice as well as the price of a sushi is $6. The MRS for Daniel's current consumption pack is one-half. To maximize energy Daniel will need to consume significantly less sushi and even more pizza. AUTHENTIC
PORTION II – SHORT ANSWER QUESTIONS
1 . Harold regards lasagna (x-axis) and burgers (y-axis) as not perfect substitutes. The buying price of burgers lessens and Harold consumes a simlar amount of lasagna. a. Chart this scenario and mark the price-consumption competition on your graph. b. May U sama dengan X2·Y be considered a utility function representative of these preferences? Present with mathematics why or perhaps why not.
installment payments on your Eric's utility is U = X 0. 2Y0. 8. The price tag on X is definitely 3 as well as the price of Y is definitely 5. If he is consuming 10 units of times, what is his income? Just how many units of Y is this individual consuming?
a few. Derive the need curve for the Giffen good by using the 2-panel graph We showed in class: on the top panel find two optimal bundles for different rates. On the bottom -panel, plot the corresponding demand competition. Make sure your responsable are branded.
4. Oranges and oranges are ideal substitutes intended for Dan (1 apple sama dengan 1 orange). He at the moment has $10 to spend. Graph Dan's with regard to oranges (Hint: you must consider the price of pears to find the appropriate answer).
PORTION III – LONG SOLUTION QUESTION
Consider preferences over good Back button and great Y displayed by the energy function, U = X(Y-k)(1-)
Where zero < < one particular & k > 0
Let We be income, Px and Py are prices in the two goods.
a. Work with Lagrangian marketing to solve intended for the demand capabilities for good Times and very good Y. Be sure to start out simply by setting up the Lagrangian function, and carry on from there, demonstrating each step of your work evidently. Make sure to simplify your demand functions whenever you can and find part solution.
m. Let We = one thousand, k sama dengan 100, = zero. 5 and Py = 2
Graph the inverse demand curve for good X
Is good X a normal or perhaps inferior very good?
Is good X a gross match for good Con or a low substitute? c.
Now allow I sama dengan 100 and the rest of the guidelines are the same. i.
What is the demand for good By?
Precisely what is the demand once and for all Y?
What is the economic meaning of the variable k?...