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Econ100B final S09

# Econ100B final S09 - Name Perm TA Econ 100B Spring 2009...

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1 Name:______________________ Perm#:_____________________ TA:__________ Econ 100B – Spring 2009 Final Exam – Version A June 9, 2009 – 8-11am 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 multiple-choice 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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2 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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Econ100B final S09 - Name Perm TA Econ 100B Spring 2009...

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