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## Question from Past Microeconomics Qualifying ExamEdit

Spring 2001 - Section II, Question three, George Mason University Give complete answers to three of the following four questions (about 25percent each) Write clear concise and legible answers.:

Suppose Al has the utility function $U = u(X~1, X~2)$, where $X~1$ and $X~2$ are goods. His income is $W$ dollars. The prices of $X~1$ and $X~2$ are $P~1$ and $P~2$ respecitively.

• a. Derive Al's demand for $X~1$. Be sure to explain your reasoning and mathematics
• b. Determine wheather Al's demand for $X~1$ is downward sloping or not. Be sure to explain your reasoning and mathematics.
• c. Determine whether $X~1$ is a normal good or not. Be sure to explain your reasoning and mathematics.
• d. What is the relationship between the demand for good $X~1$ and the excess demand for good $X~1$? If lambda (L) appeared in your calculations, what is its economic interpretation?