Intermediate Mathematical Microeconomics
Intermediate Mathematical Microeconomics ECN 311
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This 6 page Class Notes was uploaded by Hannah Hahn on Wednesday October 21, 2015. The Class Notes belongs to ECN 311 at Syracuse University taught by Emil Iantchev in Fall. Since its upload, it has received 75 views. For similar materials see /class/225646/ecn-311-syracuse-university in Economcs at Syracuse University.
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Date Created: 10/21/15
ECN 311 MIDTERM EXAM 60p total 12457140 06 MAR 2009 I Short Questions 8 points each Answer whether each of the statements is TRUE FALSE or UNCERTAIN Justify answer in space provided No credit given without explanation Partial credit will be rarely almost never given 1 Suppose that the consumer Whose preferences are graphed in the gure prefers more to less Given that U1 gt U07 this consumer is maximizing utility at the point A in the graph Beer 2 If a consumer s underlaying utility function over 1 and 2 is given by uacl x2 0 0110 99 an increase in her nominal income7 holding everything else xed7 Will not change the ratio in Which she consumes the two goods 3 Suppose Sabine s preferences over ounces of vodka and tomato juice are given by Uv7 t min2 v t When the price of vodka goes down7 income and price of tomato juice not changing7 Sabine Will buy less tomato juice because it has become relatively more expensive now 4 If the indifference curves for a preference ordering over cups of coffee and donuts are just points in the coffeeedonuts plane7 then these preferences cannot be transitive consistent 5 Stefan eats only bread and drinks only Wine If his preferences are given by ubw g 76 With 700 lt 6 lt 07 bread and Wine must be substitutes for Stefan II Long Question 20 points Answer the following question in the space provided below Show your work You can use additional paper for scratch but must turn back in ONLY this exam Partial credit will be given Consider a consumer who lives for 2 periods Let ct denote consumption spending in period t The consumer receives a salary of 31 in period 1 but nothing in the second period Hence the consumer must save for retirement Let s 2 0 denote the amount saved and 7 gt 0 the market rate of return on 1 saved The consumers intertemporal utility function takes the following form Ucl02 mm lnCQ7 where 0lt lt l a 4p Sketch the indifference curves that represent the intertemporal tradeeoff between cl and 02 Carefully justify the slope and curvature you ve depicted What is the economic interpretation of the parameter b 8p Derive the consumer s budget constraint Hint Figure out how consumption in each period depends on salary and saving Set up the Lagrangian function and write down the rsteorder conditions for utilityemaximizing choice of consumption in each of the two periods How does consumption in period 1 vary with the market interest rate Why c 8p lf ll 7 how does consumption vary over the life of the consumer Answer the same question for the cases where gt ll 7 and lt ll 7 Why Give a quick 3 sentences max interpretation of this result II Cont d II Cont d
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