ECON 601 Midterm: ECON 601 Iowa State Econ601Midterm2Fall09
Document Summary
Answer any three questions: answer all parts. (a) consider a consumer whose utility depends on two goods, { good 1 is given by: 1 the individual has income consumption bundle is ( Her hicksian demand for ip is the price of good i. 4 and the person"s optimal: a new discount store opens that allows her to buy 1x at a price of p = Suppose, instead of offering good 1 at p = , the new store has a more complex offer: you. 1 (7 points) pay a price of 12 each for the first 4 units of good 1 bought there, while additional units purchased in excess of 4 cost only 1 each. Thus, if you buy 1 x units of good 1 at that store, 12 the total cost of your purchases of good 1 there is:
