Final-2007 - Econ 6202, Fall 2007 Dmitry Shapiro Final Exam...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Econ 6202, Fall 2007 Dmitry Shapiro Final Exam December 10, 2007 ATTENTION! THIS IS 150 MINUTE EXAM! There are FIVE questions in the final. You need to do ALL of them. The exam is 150 minutes long and has 150 points. Each question has 30 points assigned. Thus it would make sense for you to start with easier questions. The exam is closed-book. Please turn off your cellphones and other sound-making devices. Good luck! 1 Econ 6202, Fall 2007 Dmitry Shapiro 1. [Partial Equilibrium - 30 points] Let inverse market demand be the linear form p = 39- . 009 q . Technology for producing output, q , is identical for all firms, and all firms face identical input prices. The long-run profit function for a representative firm is given by j ( p ) = p 2- 2 p- 399 . Find the long-run market equilibrium price, the output priduced by each firm in the equilib- rium and the equilibrium number of firms. 2. [Choice Under Uncertainty - 30 points] Consider the set outcome C = { c 1 ,c 2 ,c 3 } , and let L denote the set of simple lotteries over C . Suppose that the preference relation over L satisfies the independence axiom, and that c 1 c 2 c 3 . Show that c 1 L c 3 for every lottery L . 3. [GE and Monopoly - 30 points] Consider an economy consisting of two goods, one agent of type a and ten agents of type b . The type a agent has utility given by U a ( x a 1 ,x a 2 ) = x a 1 x a 2 and an endowment e a = (20 , 10). Each type b agent has utility given by U b ( x b 1 ,x b 2 ) = x b 1 x b 2 and an endowment e b = (1 , 2). (a) Find the competitive equilibrium prices and allocations in this economy. Is this allocation Pareto Optimal? (b) Assume now that all type b agents are price-takers, and that the type a agent acts as a monopolist. It means that he can set any price vector he likes and b-agents would take it as given. What are the market prices and allocations in this non-competitive equilibrium? Is the ratio p 1 p 2 greater than, less than, or the same as that in part (a)? What is the intuition for this? (even if you cannot compute p 1 p 2 for this market, argue qualitatively what you might expect it to be)....
View Full Document

This note was uploaded on 10/20/2010 for the course ECON 6202 taught by Professor Shapiro during the Fall '09 term at UNC Charlotte.

Page1 / 6

Final-2007 - Econ 6202, Fall 2007 Dmitry Shapiro Final Exam...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online