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Quiz 4. Budget2 Ans

Course: ECONOMICS ECON 201, Summer 2007
School: Emory
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Word Count: 167

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Banerjee Shomu ECON 201 BUDGET QUIZ #2 ANSWER Draw Joan's budget constraint for pies (x) and champagne (y) given the following information: her monthly income is \$100, py = \$5/bottle, px is \$5/pie if she buys between zero and 10 pies and \$4/pie if she buys more than 10 pies. Assume that both goods are divisible. Champagne 20 15 10 5 5 10 15 20 25 30 P ie s The blue line shows the budget if py =...

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Banerjee Shomu ECON 201 BUDGET QUIZ #2 ANSWER Draw Joan's budget constraint for pies (x) and champagne (y) given the following information: her monthly income is \$100, py = \$5/bottle, px is \$5/pie if she buys between zero and 10 pies and \$4/pie if she buys more than 10 pies. Assume that both goods are divisible. Champagne 20 15 10 5 5 10 15 20 25 30 P ie s The blue line shows the budget if py = \$5/bottle and px is \$5/pie for all units of x purchased. Since this is only true for x less than or equal to 10, the lower portion of the blue budget line does not apply and is therefore shown with dashes. Similarly, the red line shows the budget if py = \$5/bottle and px is \$4/pie for all units of x purchased. Since this is true only for x more 10, the upper portion of the red budget line does not apply and is therefore shown with dashes. Therefore Joans budget is given by the solid blue and red segmentsthere is a jump discontinuity at x = 10.
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Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201INDIFFERENCE CURVES1. Yoshimitsus utility function over two goods x and y is given to be u(x, y) = x + mincfw_x, y. Draw the indifference curve that gives him 6 units of satisfaction and show the direction in which Yoshimitsus uti
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 INDIFFERENCE CURVES ANSWERS 1. Yoshimitsus utility function over two goods x and y is given to be u(x, y) = x + mincfw_x, y. Draw the indifference curve that gives him 6 units of satisfaction and show the direction in which Yoshimi
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 DEMAND FUNCTION QUIZ #1 Ambrose consumes two goods, x1 and x2, spending all his income m on them. The price of x1 is p1, while that of x2 is p2. His utility function is u(x1, x2) = 4 x1 + x2. The marginal utility for x1 is MU1=2/ x
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 DEMAND FUNCTION #1 ANSWERS Ambrose consumes two goods, x1 and x2, spending all his income m on them. The price of x1 is p1, while that of x2 is p2. His utility function is u(x1, x2) = 4 x1 + x2. The marginal utility for x1 is MU1=2
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 DEMAND FUNCTION QUIZ #2 Anus utility function over two goods x1 and x2 is given to be u(x1, x2) = 2(x1)0.5 + 2(x2)0.5. Her marginal utility for the first good is MU1 = 1/(x1)0.5 while her marginal utility for the second good is MU2
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 DEMAND FUNCTION QUIZ #2 ANSWERS Anus utility function over two goods x1 and x2 is given to be u(x1, x2) = 2(x1)0.5 + 2(x2)0.5. Her marginal utility for the first good is MU1 = 1/(x1)0.5 while her marginal utility for the second goo
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 INCOME, SUBSTITUTION &amp; PRICE EFFECTS PROBLEM 1. Joan's monthly income is \$120, py = \$20/bottle, px is \$12/pie. Her preferences for pies and champagne can be represented by the following utility function: u(x, y) = x + y. (a) Draw J
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 INCOME, SUBSTITUTION &amp; PRICE EFFECTS ANSWERS 1. Joan's monthly income is \$120, py = \$20/bottle, px is \$12/pie. Her preferences for pies and champagne can be represented by the following utility function: u(x, y) = x + y. (a) Draw J
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 INCOME, SUBSTITUTION &amp; PRICE EFFECTS PROBLEM #2 Ysidros typical indifference curve is drawn below. Note that it is piecewise linear with kinks that lie along the two rays from the origin. (a) Ysidros income is \$204, the price of x
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 INCOME, SUBSTITUTION &amp; PRICE EFFECTS #2 ANSWERS Ysidros typical indifference curve is drawn below. Note that it is piecewise linear with kinks that lie along the two rays from the origin. (a) Ysidros income is \$204, the price of x
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201ya xbEXCHANGEObOaxayb Good x is bars of chocolate (assumed to be divisible) and good y is hours spent on computer games. Adam (person 1) has 4 bars of chocolate but doesnt have a computer; Billy (person 2) is allowed by his pa
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201ya xbEXCHANGE ANSWERSObEOaxayb Good x is bars of chocolate (assumed to be divisible) and good y is hours spent on computer games. Adam (person 1) has 4 bars of chocolate but doesnt have a computer; Billy (person 2) is allowed
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201ya xbEXCHANGE #2Ob2010Oa10203040a50xayb In the Edgeworth box above, Andreas origin is O while Beverlys is Ob. Andreas endowment is (10, 20) and Beverlys is (50, 10). They have identical utility functions u( x , y ) = x
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201ya xbEXCHANGE #2 ANSWERSOb2010EOa10203040a50xayb In the Edgeworth box above, Andreas origin is O while Beverlys is Ob. Andreas endowment is (10, 20) and Beverlys is (50, 10). They have identical utility functions u( x
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Shomu Banerjee ECON 201 EXCHANGE WITH MORE THAN 2 PERSONS An economy consists of two types of consumers, males and females. There are 4 males and 8 females. There are two consumption goods, x1 and x2, that can be traded. There is no production. Each male
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 ANSWERS TO EXCHANGE WITH MORE THAN 2 PERSONS An economy consists of two types of consumers, males and females. There are 4 males and 8 females. There are two consumption goods, x1 and x2, that can be traded. There is no production.
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 RETURNS TO SCALE Find the returns to scale for the following production functions where y denotes output, and K, L, and E are inputs. Show your work! (a) y = K1/3 .L1/3(b) y = 4K.L.E(c) y = [0.3K1/2 + 0.7L1/2]2(d) y = (2K+3L)1/2
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201RETURNS TO SCALE ANSWERSFind the returns to scale for the following production functions where y denotes output, and K, L, and E are inputs. Show your work! (a) y = K1/3 .L1/3 yo = Ko1/3 . Lo1/3 yn = (tKo)1/3 . (tLo)1/3 yn = (t)1/
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Shomu Banerjee ECON 201 COST MINIMIZATION Suppose a firm has a production function: y = [mincfw_x1, 3x2]1/2 where y is the output and x1 and x2 are inputs. (a) What is the returns-to-scale for this production function?(b) In the graph below, an isoquant
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 COST MINIMIZATION ANSWERS Suppose a firm has a production function: y = [mincfw_x1 , 3x2 ]1/2 where y is the output and x1 and x2 are inputs. (a) What is the returns-to-scale for this production function? yo = [mincfw_x1 , 3x2 ]1/2
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 COST MINIMIZATION #2 Suppose a firm has a production function: y = 2x1 + x2 where y is the output and x1 and x2 are inputs. (a) In the graph below, an isoquant for y = 8 is shown. The prices of the inputs are w1 = \$1 and w2 = \$2. D
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 COST MINIMIZATION #2 ANSWERS Suppose a firm has a production function: y = 2x1 + x2 where y is the output and x1 and x2 are inputs. (a) In the graph below, an isoquant for y = 8 is shown. The prices of the inputs are w1 = \$1 and w2
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 COST MINIMIZATION #3 Suppose a firm has a production function: 1 y = x1 x2 = x1 /2 x1 /2 2 where y is the output and x1 and x2 are inputs. The marginal productivity for the inputs is given by x1 /2 x1 /2 MP = 21 /2 and MP2 = 11 /2
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 COST MINIMIZATION #3 ANSWERS Suppose a firm has a production function: 1 y = x1 x2 = x1 /2 x1 /2 2 where y is the output and x1 and x2 are inputs. The marginal productivity for the inputs is given by x1 /2 x1 /2 MP = 21 /2 and MP2
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Shomu Banerjee ECON 201PERFECT COMPETITION ANSWERS1 A perfectly competitive firm has a cost function given by C(q) = 72 + 2q + 2 q 2. The market price, P, for its product is \$20. (a) Find out quantity the firm produces in the short-run, q*. Set P = MC t
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Shomu Banerjee ECON 201 PERFECT COMPETITION CONTD QUIZ Recall the perfectly competitive firm with a cost function given by C(q) = 72 + 2q + 0.5q2. In the previous quiz, you had calculated the firms supply curve to be qs(P) = P 2 for P &gt; 2 and zero otherwi
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 PERFECT COMPETITION CONTD ANSWERS Recall the perfectly competitive firm with a cost function given by C(q) = 72 + 2q + 0.5q2. In the previous quiz, you had calculated the firms supply curve to be qs(P) = P 2 for P &gt; 0 and zero othe
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Shomu Banerjee ECON 201 MONOPOLY Trygve is a monopolist with a cost function given by 1 C(Q) = 72 + 100Q + 2 Q2 facing an inverse market demand curve P = 700 - Q. Its marginal cost is MC = 100 + Q. (a) Find his profit-maximizing price and output combinati
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 MONOPOLY ANSWERS Trygve is a monopolist with a cost function given by 1 C(Q) = 72 + 100Q + 2 Q2 facing an inverse market demand curve P = 700 - Q. Its marginal cost is MC = 100 + Q. (a) Find his profit-maximizing price and output c
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 MONOPOLY WITH TAX QUIZ A monopolist producer faces the (inverse) demand curve given by P = a - Q, where P is the price charged and Q is the quantity demanded. The total cost of producing the good is C(Q) = cQ; the marginal cost is
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 MONOPOLY WITH TAX QUIZ ANSWERS A monopolist producer faces the (inverse) demand curve given by P = a - Q, where P is the price charged and Q is the quantity demanded. The total cost of producing the good is C(Q) = cQ; the marginal
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 CONSUMPTION EXTERNALITY Suppose Atkins and Bodkins are the only two consumers in our economy, there are two goods x and y, and Atkins endowment is a = (10, 0) while Bodkins is b = (0, 10). Their utility functions are given by uA(xa
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 CONSUMPTION EXTERNALITY ANSWERS Suppose Atkins and Bodkins are the only two consumers in our economy, there are two goods x and y, and Atkins endowment is a = (10, 0) while Bodkins is b = (0, 10). Their utility functions are given
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 EXTERNALITY QUIZ A honey farm is located next to an apple orchard. The honey producers cost function is cH(h) = (h2/100) a/5, where h is the quantity of honey produced and a is the quantity of apples producedthere is a positive ext
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 EXTERNALITY QUIZ ANSWERS A honey farm is located next to an apple orchard. The honey producers cost function is cH(h) = (h2/100) a/5, where h is the quantity of honey produced and a is the quantity of apples producedthere is a posi
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201GROUP PRICING QUIZA monopolist engages in third degree differential pricing (i.e., group pricing) across two markets with demand curves given by and Its cost function is given by P1 = 60 0.5Q1 P2 = 80 Q2. C(Q) = Q2,where Q = Q1 +
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201GROUP PRICING ANSWERSA monopolist engages in third degree differential pricing (i.e., group pricing) across two markets with demand curves given by and Its cost function is given by P1 = 60 0.5Q1 P2 = 80 Q2. C(Q) = Q2,where Q = Q
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201BUNDLING QUIZDull Computers produces laptop computers (a high-quality good) for \$300 each, or desktop computers (a low-quality good) for \$200. There are 100 potential buyers each of whom will buy either one or none. Buyers are eit
Emory - ECONOMICS - ECON 201
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Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201GAME THEORY QUIZTom is a monopoly manufacturer who can use laborers to pack his product into boxes or use an expensive set of robotic arms which will reduce the number of workers he hires but increase his fixed cost. Toms profit i
Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201GAME THEORY ANSWERS(a) Fill in the payoffs for each player in the matrix below:Ann's actions Stay out Use labor Tom's actions Use robot 500, 0 132, -36 900, 0 Enter 400, 300(b) Does either Tom or Ann have a dominant strategy? If
Emory - ECONOMICS - ECON 201
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Emory - ECONOMICS - ECON 201
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Emory - ECONOMICS - ECON 201
Shomu Banerjee ECON 201 COURNOT DUOPOLY Suppose two duopolists produce the same identical product. The market demand for their product is given by the inverse demand curve p = 120 q1 q2, where p is the price, and q1 and q2 the output levels of the firms.
Emory - ECONOMICS - ECON 201
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