ECON 701 Midterm: Micro I Prelim June 2017 APSM 5-26-17
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This exam has four questions and is worth 100 points. Answer each question in a separate exam book. If you need to make additional assumptions, state them clearly. +: find f; given that the (cid:133)rm(cid:146)s cost function is c(q; w) = 2pw1w2q (cid:0) w2 w1q if if w1 w2 (cid:21) w1 w2 (cid:20) 8>>>< (b) (10 pts) in a three-good world, suppose a consumer(cid:146)s demands for goods 1 and 2 are given by x1(p; y) = p2 p3 and x2(p; y) = p1 p3 on some open subset of r4. ++: can these demands arise from the maximization of a continuous utility function representing locally nonsatiated strictly convex preferences on r3. Prove your answer: (25 pts) risk aversion and comparative statics. There are two states of the world, and n; which will occur with probabilities (cid:25) 2 (0; 1) and. In state ; alex loses l > 0 dollars.
