CostCurves(Chapter8)
Deriving the long-run and short-run cost curves of a firm from cost-minimizing behavior:
Definition:
A firms long-run total cost curve traces out expenditures on the cost-minimizing/optimal/economically efficient combination of
inputs
PricingandMarketStructures(Chapter9)
Up until now we examined the behavior of individual decision making units on:
Demand side of a market (chapters 3-5)
Supply side of a market (Chapters 6-8)
We derived an individual consumers demand
We derived an indivi
Test your understanding for the final
Q1. Sam Malone is considering renovating the bar stools at Cheers. The production function for new bar stools is
given by q = 0.1k0.2l0.8, where q is the number of bar stools produced during the renovation week, k rep
Intermediate Micro: Problem Set 1 Solutions
Seher Gupta
February 6th 2014
Problem 1.
(a) Let commodity 1 be denoted by x1 and commodity 2 as x2 . Then, we can write
Helgas budget set and her budget line as:
cfw_(x1 , x2 ) : 10x1 + 5x2 40
(1)
10x1 + 5x2 =
Intermediate Micro: Problem Set 3 Solutions
Seher Gupta
February 20th 2015
Problem 1.
(a). The budget constraint of Danny is given by: 10r + 5c = 90. The slope of his
budget constraint is: pr /pc = 2. 1 Using the given utility function, w can calculate
th
Intermediate Micro: Problem Set 2 Solutions
Seher Gupta
February 13, 2015
Problem 1.
(a) Whitney will strictly prefer a bundle (x1 , x2 ) to (y1 , y2 ) if (x1 , x2 ) W (y1 , y2 ),
but NOT (y1 , y2 ) W (x1 , x2 ). Which according to the rule given to us me
Intermediate Micro: Problem Set 4 Solutions
Seher Gupta
February 27th 2015
Problem 1.
(a) False. We see examples in Question 3 and 4 when the demand of a good also
depends on the price of the other good.
(b) False. By denition if x1 and x2 are substitutes
Overview and intro to game theory:
(Note: You are not expected to know the sections shaded in grey read them only if you are interested in
the theoretical aspects of game theory)
Broadly speaking market structures can be classified as:
|_|_|_|
Perfect
Mon
Intermediate Microeconomics
Problems Set # 11
(Due 5/6 at the beginning of class)
Please show all your work for each problem
Graphs must be no smaller in size than half a page. Do not erase or scratch on the graphs. Submit only a finalized
graph whenever
Intermediate Microeconomics
Problems Set # 9
(Due 4/20 at the beginning of class)
Please show all your work for each problem
Graphs must be no smaller in size than half a page. Do not erase or scratch on the graphs. Submit only a finalized
graph whenever
Intermediate Microeconomics
Problems Set # 8
(Due April 13 at the beginning of class)
Please show all your work for each problem
Graphs must be no smaller in size than half a page. Do not erase or scratch on the graphs. Submit only a finalized
graph whene
Recall: Can competitive markets ever fail to achieve an efficient resource allocation, i.e. can all
markets be competitive and yet the resulting allocation be such that there is over or under production?
Answer: Yes. This is possible if
1) There are exter
Intermediate Mirco Theory: Problem Set 5
Solutions
Seher Gupta
March 6th 2015
Problem 1.
(a). Marks utility function is given by: u(x1 , x2 ) = x2 x2 . In order to nd the demand
1
functions for Mark, rst we will use the optimality condition:
M RS
p1
@u/@x