1. Consider an outsourcing model in which the labor hours of four activities in the United States and
Mexico are as follows:
Note that labor hours in Mexico are four times those in the United States, reflecting Mexicos lower
productivity. Also note that t
1. Explain how increasing returns to scale in production can be a basis for trade.
Answer: With increasing returns to scale, countries benefit from trade due to the potential to reduce their
average costs by expanding their outputs through selling in a la
Math 233
Hessians andUnconstrainedOptimization
Fall 2001
The Big Picture: Secondderivatives,whetherin single or multi variablecalculus,measuretherateof changein slopes(i.e.thecurvatureof thefunctionf). What makesproblemsharderin multivariablecalcis that w
Marshallian Demand Elasticities
Price elasticity of demand (ex,px)
ex ,px x/x px / px x px px x
Marshallian Demand Elasticities
Income elasticity of demand (ex,I)
e x ,I x/x I/I x I I x
Cross-price elasticity of demand (ex,py)
e x ,py x/x py / py x py
Revealed Preference
If (x*,y*) is chosen when (x',y') is available, we say that (x*,y*) is revealed preferred (x',y').
Often very helpful. You can never observe a person's utility function, but you can observe her choices.
The Lump Sum Principle
Taxes
Differentiation - a quick review
The derivative generalizes to multiple dimensions in a straightforward way. x-i denotes all variable other than i. Definition Suppose f : Rn R. The partial derivative of a function: f (xi , x-i ) - f (x) f (x) = fi (x) = l
Constrained Optimization
Constrained Optimization: Almost all of microeconomics can be described as constrained optimization: One definition of economics I've heard: Economics is the study of efficient allocations of scarce resources. Efficient means opti
Models of Competition
A Cournot game with linear demand and constant marginal cost: Two firms, firm 1 and firm 2. Each firm chooses a quantity of a product to produce, q1 and q2 . Each unit costs c to produce, so the total cost of producing q units is q c
Games - Introduction
Most of classical microtheory is static. We assume that either a consumer's choices don't affect the prices she faces or else that she doesn't realize that she affects them. Similarly, a firm makes decisions about production as a resp
Preferences.
Preferences
Preferences Primitives: X : : : "set of alternatives" "at least as good as" (weakly preferred) (strictly preferred) (indifference) Closed and convex set
Rationality Assumptions
1
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ECG 700 Midterm In order to receive full points, you must carefully and thoroughly justify your answers. Question 1 - 30 points 1 1 A person's utility is given by the Cobb-Douglass function u(x, y) = x 2 y 2 . (a) Show that the optimal demand functions fo
Problem Set 2 - Preferences 3.1 You don't need to graph the curve, just determine whether or not an indifference curve is convex. In addition to the problems in the book, also do: f. U = X 2 + Y 2 1 2 g. U = X 3 Y 3 h. U = ln x + ln y 3.3 4.2 4.5 4.7
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Problem Set 3 1. Suppose an individual's utility function is represented by the CES function: 1 1 U (x, y) = - - x y (a) Use the Legrangian multiplier method to calculate the uncompensated (Marshallian) demand functions for X and for Y. (b) Show that dema
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Problem Set 6
1. Consider the following exchange economy. There are two goods and two consumers. The first consumer has a utility function U1 (x1 , x2 ) = x x , and the second consumer has a utility function U2 (x1 , x2 ) = 1 2 x1 + x2 . Consumer 1 has an
Problem Set 6 - Brief Solutions
1. and 2. For both of these problems, the solution is
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Lecture 1 - Math Review.
Lecture 1 - Math Review.
Topics from Calculus you should know: How to define a derivative How to interpret f (x) = 2. What does that mean? How to calculate the derivative of:
1 2 3
Topics from Calculus you should know (cont.): The
January, 2003
Managerial Economics ECO 9705 Spring 2003 Tuesdays and Thursdays, 6:00 7:15pm Prof. June Ellenoff O'Neill
Chapter 1 - Preliminaries Understand real versus nominal prices Microeconomics behavior of individual economic units, including consume
Outline of Chapter 4
A. The Representative Consumer
1. Labor Supply
B. The Representative Firm
1. Production Function 2. The Marginal Productivity of labor and Capital 3. Supply Shocks
C. Equilibrium in the Classical Labor Market
A. Full Employment B. Fac
CSC228 Sequences/ Summations 1. What is the term a8 of the sequence cfw_ a n if a n equals a. 2 n + 1 n b. 2
5/1/2009
2. (Rosen, page 236) List the first 10 terms of the sequence that begins with 3 with each succeeding term is twice the previous term. 3.