ECO 303 Study Guide - Midterm Guide: Engel Curve, Demand Curve, Inferior Good

• School: Stony Brook University
• Department: Economics
• Course: ECO 303
• Professor: Hugo Benitez Silva

Document Summary

These questions, once again, represent familiar material from lectures, recitations, and problem sets. The exam is worth a total of 100 points. You can do well at this: (ch 6) weibo"s preferences for goods (cid:1876)(cid:2869) and (cid:1876)(cid:2870) are such that (cid:1847)(cid:4666)(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4667) (cid:3404) (cid:1865)(cid:1861)(cid:1866)(cid:4668)(cid:1876)(cid:2869),(cid:1876)(cid:2870)(cid:4669). We are interested in understanding the response of her demand for (cid:1876)(cid:2869) (a) derive (or report from memory) the expressions describing weibo"s demand for (cid:1876)(cid:2869) and (cid:1876)(cid:2870) given the primitive characteristics of the problem. I. e. , derive (cid:1876)(cid:2869) (cid:4666)(cid:1868)(cid:2869),(cid:1868)(cid:2870),(cid:1877)(cid:4667) and (cid:1876)(cid:2870) (cid:4666)(cid:1868)(cid:2869),(cid:1868)(cid:2870),(cid:1877)(cid:4667). (b) graphically depict weibo"s optimal ((cid:1876)(cid:2869),(cid:1876)(cid:2870)) point at fixed ((cid:1868)(cid:2869),(cid:1868)(cid:2870)) for three different (c) derive an expression for the engel curve for (cid:1876)(cid:2869). Why or why not? values of income (y). His income in period 1 is (cid:1865)(cid:2869), and in period 2 is (cid:1865)(cid:2870). For now assume prices of consumption in periods 1 and 2 are (cid:1868)(cid:2869)(cid:3404)(cid:1868)(cid:2870)(cid:3404)(cid:883).