midterm-s04 - Department of Economics University of...

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Econ 121 Spring 2004 Page 1 Midterm Exam Department of Economics Spring 2004 University of California Woroch/Lopez/Tovar Economics 121 : MIDTERM EXAM GENERAL INSTRUCTIONS : Write your name on the front cover of your blue book. The exam has 3 parts and is worth a total of 100 points. Point assignments are given in the instructions for each part. You are encouraged to check your calculations on scratch paper but be certain to put all of your answers in the bluebooks . I. TRUE or FALSE or UNCERTAIN and EXPLAIN : Choose 3 of the following 4 statements, decide whether each is true or false or uncertain, and then explain the reasoning behind your answer in a few sentences. Supply any assumptions you may think necessary to draw your conclusion . Each question is worth 7 points for a total of 21 points. 1. If the costs of producing two goods, 1 and 2, individually and jointly, are given by the cost functions: C(q 1 , 0) = 75,000 + (1/2) q 1 2 C(0, q 2 ) = 100,000 + (1/2) q 2 2 C(q 1 , q 2 ) = 125,000 + (1/2) (q 1 + q 2 ) 2 then the average incremental cost of good 2 is given by: 2 000 , 25 2 2 2 q q AIC + = . 2. Too many firms will enter an industry if after entry the firms behave as Cournot oligopolists. 3. In the below normal form game, both firm 1 and firm 2 have a dominated strategy, but neither firm has
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This note was uploaded on 05/05/2008 for the course ECON 121 taught by Professor Woroch during the Fall '07 term at University of California, Berkeley.

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midterm-s04 - Department of Economics University of...

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