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Department of Economics
Fall 2004
University of California
Woroch/Lopez/Sydnor
Economics 121:
MIDTERM EXAM
GENERAL INSTRUCTIONS
:
Write your name
and your TA’s name
on the front cover of each
of TWO BLUE BOOKS.
The exam has 3 parts.
Put Parts I and II.1 in one blue book, and Parts
II.2 and III in the second.
Point assignments are given in the instructions for each part.
The exam
is worth 100 points.
You may check your calculation on scratch paper but be certain to put all of
your answers in the bluebooks
.
I.
TRUE or FALSE or UNCERTAIN and EXPLAIN
:
Choose 4 of the following 5 statements,
and decide whether each is true or false or uncertain, and then explain the reasoning
behind your answer in a few sentences; if appropriate, provide a diagram.
Each question is
worth 8 points for a total of 32 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) = 125 +
q
1
2
C(0, q
2
) = 200 +
q
2
2
C(q
1
, q
2
) = 250 + q
1
2
+ q
2
2
+ q
1
q
2
then there are economies of scope
between the two products for all levels of production.
2.
The Lerner Index increases as the number of symmetric Cournot oligopolists increases.
3.
In the normal form game at the rights, if
2 < X < 3
and 3 < Y < 4, then (B1, B2) is a Nash equilibrium
and
it is also Pareto Optimal.
4.
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 Fall '07
 Woroch
 Economics

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