ECON 601 Midterm: ECON 601 Iowa State Econ601Midterm1Fall14
Document Summary
Answer any four questions: (25 points) answer all parts. Consider a two good world in which an individual has the following preferences. For any two bundle of goods, x x and. Carefully justify your answer and draw the upper and lower contour sets to the bundle. Is there global satiation that is, is there a best consumption point in. Illustrate your answer graphically for the case in which p. 2: (9 points) how would your answers to parts (b) and (c) change if preferences were modified to: x. 1: (25 points) answer all parts, (6 points) state the relevant properties of an expenditure function and indicate what restrictions are implied if we assume preferences are homothetic. For parts (b) and (c), assume the following expenditure function: e p u u. 3: (7 points) find the hicksian demands, (12 points) find the quasi-concave utility function dual to this expenditure function.
