Documente Academic
Documente Profesional
Documente Cultură
Problems
Chapter 2: Questions for review: 1-8, 10-11. Chapter 4: (Exercises) 6, 7
Consumer Choice
Topics: Consumer preferences; indifference curves; consumer choice; Normal and
inferior goods; income and substitution effects; Giffen goods.
Reading: Ch. 3 pp. 6182, 89-91; Ch. 4 pp. 103-115. Review Questions
12. What are the three basic assumptions about preferences? 13. What is completeness? 14. What is transitivity?
15. What are indifference curves? 16. What is an indifference map? 17. Can indifference curves intersect? Why or why not? 18. What is marginal rate of substitution between two goods? How is it calculated from the indifference curve? 19. What is the relation between marginal rate of substitution of two goods and marginal utilities of these goods? 20. What is the law of diminishing marginal rate of substitution? 21. What is the optimality of utility maximization imply? 22. What is the relation between relative prices of different goods and marginal utilities of those goods in an optimal allocation? 23. What is a normal good? 24. What is an inferior good? 25. What is substitution effect? 26. What is income effect? 27. What is a Giffen good? 28. Are all inferior goods Giffen good? And vise versa?
Problems
Chapter 3: (Exercises) 2, 3, 4, 5, 6, and 14. Chapter 4: (Exercises) 1, 2, 3, 4
38. What is a Cobb-Douglas production function? Verify all the concepts with this production function. 39. What is opportunity cost? 40. What is fixed cost? What is variable cost? What is sunk cost? 41. How do you define marginal cost, average total cost, average variable cost and average fixed cost? 42. What is an isocost line? 43. What are economies and diseconomies of scale? 44. What is the relation between short run and long run costs? 45. What is a product transformation curve? 46. What are economies and diseconomies of scope? How to measure the degree of economies of scope?
Problems
Chapter 5 (Exercises): 1, 2, 3, 5, 6, 7, 8, 9, and 10. Chapter 6 (Exercises): 1, 2, 3, 5, 6, 8, 9, 10, 11, 13, and 14.
Perfect competition
Topics: Price taking; product homogeneity; free entry and exit; profit maximization;
market and firm demand curves; short run and long run profit maximization;
d. Tax e. Subsidy
Problems
Chapter 7 (Exercises): 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, and 16. Chapter 8 (Exercises): 2, 5, and 6.
Monopoly
Topics: Average revenue and marginal revenue; monopolists profit maximization;
elasticity and pricing; measurement of monopoly power; source of monopoly power; social costs of monopoly; price regulation; natural monopoly and regulation.
Problems
Chapter 9: (Exercises) 3, 4a, 5, 6, 7, 18.
Problems
Chapter 10: (Exercises) 2, 3, 4, 5, 6, 7 and 8.
Reading: Ch. 11 pp. 377-395; Ch. 12 pp. 405411, 416-432 Review Questions
83. In a game, who is a player? 84. In a game, what is a strategy, strategy set and strategy profile? 85. What is dominant strategy for a player? 86. What is a dominant strategy equilibrium? 87. What is a Nash equilibrium? 88. How many Nash equilibriums could be there in a game? 89. What is Cournot duopoly model and Cournot Nash equilibrium? 90. What is the reaction curve in the Cournot duopoly model? 91. What is the relation between Cournot output, monopoly output and perfect competition output? 92. What is Bertrand model? 93. Why should there be price rigidity in oligopolistic pricing? 94. Explain kinked demand curve as an outcome of price rigidity. 95. What is price leadership in a market dominated by a few firms? 96. What is the outcome in a finitely repeated prisoners dilemma game? 97. What is the outcome in an infinitely repeated prisoners dilemma game? 98. What is a sequential game? 99. How would you refine various Nash equilibria through sub-game mechanism? 100. Demonstrate the following with an example: a. First mover advantage b. Empty threats c. Credible commitment
Problems
Chapter 11: (Exercises) 3a, 3b, 3c, 3d, 4, 5, 6, 8, 10, 11. Chapter 12: (Exercises) 3b, 3c, 4a, 4c, 5a, 5c, 5d, 7, 8a, 8b, 8c.
Review Questions
101. 102. 103. 104. 105. What is social cost of an action (say, industry output)? What is the difference between social cost and private cost? What is the definition of external cost? When do we have a case of negative externality? What is the social benefit, private benefit and external benefit of an action? 106. When do we have a case of positive externality? 107. What is coase theorem? 108. Illustrate Coase theorem with various examples. 109. What are the properties of a public good? 110. What is a nonrival good? 111. What is a nonexclusive good? 112. Draw examples of goods which are nonrival but exclusive. 113. Is there any nonexclusive but rival goods? Clarify. 114. What is the problem of free riding in public goods? 115. What is the efficient way of allocating public goods efficiently? 116. Is there any way to secure public goods through market? 117. Does voting via majority rule secure optimal level of public good? Work out with an example.
Problems
Chapter 16: (Exercises) 3, 6, 7, 8 and 9.
595611, 621626;
Find the expected value of standard deviation of a random variable from its probability distribution. 119. What is the role of standard deviation in describing risk? Elaborate with examples. 120. Define risk-averse, risk-neutral and risk-loving preferences. 121. Define risk premium. 122. For a lottery and utility function, calculate risk premium. 123. What is the condition for reduction of risk through diversification? 124. What is the role of insurance in reducing risk? Elaborate.
125. What is actuarial fairness in insurance? 126. Can you observe a behavior in you which is not consistent with neither of risk-averse, risk-neutral and risk-loving attitude?
Problems
Chapter 18: (Exercises) 1, 2, 3, 4, 5, 6, 7, 8, and 10.
Information economics
Topics: Adverse Selection; Moral Hazard. Reading:
[Kreps] Ch. 1819. [PRM] Ch. 17 pp. 567-584.
Review Questions
127. 128. What is the problem of adverse selection? Clarify with an example. What is the problem of moral hazard? Elaborate.
Problems
Chapter 18 (David Kreps, "Microeconomics for Managers"): 18.1, 18.2. Chapter 19 (David Kreps, "Microeconomics for Managers"): 19.2, 19.3.