1
Name:______________________
Perm#:_____________________
TA:__________
Econ 100B – Spring 2009
Final Exam – Version A
June 9, 2009 – 811am
Instructions:
Write your name, perm #, and TA in the blanks on this page and write your
perm # and version # on your Scantron sheet.
There are two parts to this exam.
Part I
consists of 15 multiplechoice questions (2 pts. each) and Part II consists of 2 longer
problems (10 pts. each).
No calculators are allowed.
You have three hours (180min.) to
complete this exam.
If you get stuck on something, I suggest moving on and coming back
later if/when you have time.
Good luck!
Part I – Multiple Choice
(30 out of 50 points)
Indicate your answers on the Scantron sheet.
Make sure you put your response on the
correct line.
1)
The inverse demand function for diamonds is P = 1500  2Q.
The market for
diamonds consists of two firms, Shiny and Dull.
Shiny’s cost function is
c(q)=300q
+ 5,000
and Dull’s cost function is
c(q)=300q + 10,000
.
Which of the following
statements is true?
a.
Cournot equilibrium total output is 400.
Stackelberg eq. total output is 450.
b.
Cournot equilibrium total output is 400.
Stackelberg eq. total output is 300.
c.
Cournot equilibrium total output is 200.
Stackelberg eq. total output is 450.
d.
Cournot equilibrium total output is 200.
Stackelberg eq. total output is 150.
e.
Cournot equilibrium total output is 200.
Stackelberg eq. total output is 300.
2)
Cournot duopolists Firm 1 and Firm 2 face inverse demand P = 24 – Q and each has a
marginal cost of 6.
Firm 2 revamps it’s production process, allowing to produce at
marginal cost of 3 (while Firm 1 still has MC of 6).
How does this affect Firm 1?
a.
Its output is unchanged, but it’s profits fall by 6.
b.
Its output and profits are unchanged.
c.
Its output drops by 1 and it’s profits fall by 11.
d.
Its output is unchanged, but its profits fall by 12.
e.
Its output increases by 1 and it’s profits fall by 1.
3) In the small town of Broadlands, there are currently only two coffee shops, The Java
House and The Drip.
The two shops compete as Cournot duopolists.
The inverse
demand function for coffee in Broadlands is given by P = 150 – Q and each firm has
the same cost function of
c(q) = q²
.
What is total equilibrium output?
a. 296/3
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b. 60
c. 75
d. 148/3
e. 37.5
4)
L
R
U
3 , 4
a
,
b
D
2 , 2
7 , 1
Which of the following statements about the above matrix game is true?
a. If
a >
3 and
b >
1 then (
U,R
) is a Nash equilibrium.
b. If
a <
7 and
b >
4 then there is no Nash equilibrium.
c. If
a >
7 and
b >
1 then (
U,R
) is a Nash equilibrium.
d. If
a <
3 and
b >
1 then there are two Nash equilibria.
e. If
a >
3 and
b <
4 then (
U,R
) is a Nash equilibrium.
5)
In an exchange economy, there are two people (A and B), and two goods (X and Y).
The utility functions of A and B are given by
UX
Y
AA
A
=
and
Y
BB
B
=
.
Person A starts with 30 units of X and zero units of Y.
Person B starts with zero units of X and 10 units of Y.
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 Spring '08
 KILENTHONG
 Economics, Game Theory, Myra, a. b. c., b. c. d.

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