Re: sample questions of ISI ME 2 , 2010

Posted by SONAL on May 05, 2010; 7:08am
URL: http://discussion-forum.276.s1.nabble.com/sample-questions-of-ISI-ME-2-2010-tp4990586p5007503.html

thanx vishruti...........

7(d) true/false------The amount of stipends which Indian Statistical Institute pays to its students is a part of GDP.

9(a)     Consider the utility function U(x1, x2) = (x1 − s1)^0.5(x2 − s2)^0.5, where
s1 > 0 and s2 > 0 represent subsistence consumption and x1 >=s1 and
x2 >= s2. Using the standard budget constraint, derive the budget share
functions and demand functions of the utility maximizing consumer. Are
they linear in prices? Justify your answer.

(b)       Suppose that a consumer maximizes U(x1, x2) subject to the budget constraint
p(x1 + x2) <= M where x1 >=0, x2 >= 0, M > 0 and p > 0. Moreover,
assume that the utility function is symmetric, that is U(x1, x2) =
U(x2, x1) for all x1 >= 0 and x2 >= 0. If the solution (x1*, x2*) to the consumer’s
constrained optimization problem exists and is unique, then show
that x1*=x2*.