• Pennsylvania State University

• ECON 302

Econ 302 Final Exam

• Thursday 12/19 at 2:30-4:20 PM

• Exam make up: 7 long problems

1. Income/Substitution effects

a. Determine consumer’s optimal bundle (X* and Y*)

b. Determine the new optimal after a price change (X** and Y**)

c. Determine value of M that makes the consumer just as well off after the

price change as they were before the price change with original M

d. Compensated budget constraint

e. Income and substitution effects

f. Illustrate (Graph)

2. General Equilibrium

a. Given:

a.i. Two consumers

a.ii. Two goods

a.iii. Utility functions

a.iv. Initial endowment

b. Find:

b.i. Relative prices that lend to a competitive equilibrium

b.ii. Find the bundle that each consumer chooses at the competitive

equilibrium

b.iii. Find budget constraint that each consumer faces

b.iv. Illustrate in the Edgeworth box

3. Perfect competition model

a. Short run π-maximizing level of output

b. Profit

c. Graph MC, AVC, ATC

d. Short run supply curve

e. Adjustment to long run equilibri