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Midterm_Review_Lecture

# Midterm_Review_Lecture - Midterm Review Prof Jan De Loecker...

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Midterm Review Prof. Jan De Loecker Stern - New York University March 10, 2008

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Outline of Today’s Review Describe the midterm [Wednesday March 12 at 6:15PM in Schimmel Auditorium] Go over some of the more difficult questions on the sample midterm. Give you the answers to the sample midterm.
Midterm Description 1 hour and 15 minutes. No notes or books, bring a calculator (even thought it is not strictly required). We give out points for both getting the right answer and having the correct argument (even is the algebra or the numbers don’t work out). Finally, we can’t give out points for long winded answers that are both correct and incorrect: be concise.

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Short Answer Questions True or false, motivate. Nomis attaches a utility of 10 to microeconomics, whilst Naj attaches a level of 100. Will Naj be happier than Nomis if each of them takes microeconomics?
Short Answer Questions True or false, motivate. Nomis attaches a utility of 10 to microeconomics, whilst Naj attaches a level of 100. Will Naj be happier than Nomis if each of them takes microeconomics? False. Remember that utilities cannot be compared accross individuals, so it makes no sense to use utility to judge if Naj or Nomis will be happier if they take microeconomics.

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Short Answer Questions Explain what is meant by a corner solution?
Short Answer Questions Explain what is meant by a corner solution? A corner solution is when a consumer only consumes 1 good and not another. For example, when I only consumer pizza and no caviar.

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Short Answer Questions How does the concept of consumer surplus have important applications in economics?
Short Answer Questions How does the concept of consumer surplus have important applications in economics? Consumer surplus is used to evaluate the effect on consumers of different policies. For instance, if I want to evaluate the effect of a new bridge (and see if it is worth building), I need to compare consumer surplus from the bridge to the cost of construction.

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Short Answer Questions What is the difference between a quadratic and cubic cost function and when might the use of each function be appropriate?
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Midterm_Review_Lecture - Midterm Review Prof Jan De Loecker...

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