Economics Honors Exam 2010 Solutions: Microeconomics
Questions 1-2
Question 1 (Microeconomics, 30 minutes). Consider a small exchange economy
with two consumers, A and B, and two commodities, x and y.
Consumers A and B have preferences
uA ( x A , y A ) = x A y A , uB ( x B , y B ) = x B y B
The initial endowments of the goods are that A has 12 units of x and 2 units of y
while B has 8 units of x and 18 units of y.
€
a. (5 points) Draw an Edgeworth box for this economy. Be sure to label everything
clearly (including the endowment point).
Answer:
This is worth 5 points
To be awarded 5 points, graphs must be fully labeled (including axis (only one x and
y required, the two origins (which parties?), endowment point)
-1-
Questions 1-2
Question 1 (Microeconomics, 30 minutes). Consider a small exchange economy
with two consumers, A and B, and two commodities, x and y.
Consumers A and B have preferences
uA ( x A , y A ) = x A y A , uB ( x B , y B ) = x B y B
The initial endowments of the goods are that A has 12 units of x and 2 units of y
while B has 8 units of x and 18 units of y.
€
a. (5 points) Draw an Edgeworth box for this economy. Be sure to label everything
clearly (including the endowment point).
Answer:
This is worth 5 points
To be awarded 5 points, graphs must be fully labeled (including axis (only one x and
y required, the two origins (which parties?), endowment point)
-1-
