Problem Set 9: Market Failures
Question 1. Read Moral Hazard article posted on Blackboard. What do you think of the
quote Moral Hazard is hogwash?
Question 2. Clare manages a ski shop. Her utility function is given by U = w
Problem Set 8: Monopoly and Oligopoly, plus a little Welfare
Question 1. Problem 14.1
Question 2. Problem 14.2
Question 3. Problem 14.3 In part c, compute the Lerner Index for each case.
Question 4. Problem 14.6 a-c
Problem Set 7: Profit Max and Equilibrium Models
Question 1. A firm faces a demand curve given by q = 100 2P . Marginal and average costs
for the firm are constrant at $10 per unit.
(a) What output should the firm produce t
Problem Set 6: Production and Costs
NS Problem 9.2.
NS Problem 9.4.
NS Problem 9.5 parts a-c.
NS Problem 9.7 parts a-b.
Question 5. Digging clams by hand in Sunset Bay require
Problem Set 4: Uncertainty
NS Query 7.1 case 1
NS Query 7.2
NS Problem 7.1
NS Problem 7.2
NS Problem 7.3
NS Problem 7.4
NS Problem 7.5
Question 8. NS P
Problem Set 5: Game Theory
Question 1. Using the information found in Lecture 13, show that the optimal number of
sheep on the common is 60 (if you are a social planner who is maximizing total payoff in a
Problem Set 2: Consumer Theory
Question 1. Chapter 3, Problem 1. Substituting using the implicit function theorem makes
these problems easier to solve.
Question 2. Chapter 3, Problem 3. Here, lets not focus on diminishing MRS again (se
Problem Set 3: Consumer Demand
NS Problem 4.10.
Question 2. Graphically, decompose the substitution and income effects of a price increase for
good x, where the good is a Giffen good. Make sure you label all parts carefully