August 1, 2008
Version 2
Econ 100B
Final
Correct = 4 points, Blank = 1 point, Incorrect = 0 points
1. A monopolist faces an inverse demand function p(Q)=1002Q. If she
sells 20 units of output, her marginal revenue will be:
(a) 20
(b) 60
(c) 80
(d) 100
(e) none of the above
2.
The demand for Professor Bongmore's new book is given by the
function Q=3,000100p. If the cost of having the book
typeset is 7,000, if the marginal cost of printing an extra
copy is 4, and if he has no other costs, then he would
maximize his profits by:
3.
Late in the day at an antique rug auction there are only two
bidders left, April and Bart. The last rug is brought out an
each bidder takes a look at it.
The seller says that she will
accept sealed bids from each bidder and will sell the rug to the
highest bidder at the highest bidder’s bid. Each bidder believes
the other is equally likely to value the rug at any amount
between 0 and $1000. Suppose April believes that Bart will bid
half as much as the rug is worth to him. What is the probability
that April will get the rug if she bids $200 for it?
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4.
A seller decides to sell an object by means of a sealedbid
secondprice auction without a reservation price.
There are
two bidders.
The seller believes that for each of the two
bidders there is a probability of 1/2 that the bidder's
value for the object is $500 and a probability of 1/2 that
the bidder's value is $300.
The seller believes that these
probabilities are independent between bidders.
If the
bidders bid rationally, what is the seller's expected
revenue from the auction?
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 Winter '08
 Staff
 Auction, little pig, bidders, inverse demand, big pig, Normal bidders

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