UBC Commerce/ FRE 295 MIDTERM EXAM
October 27, 2004
NAME:_ STUDENT NUMBER _ SECTION: _ PROFESSORS NAME: _ Instructions: This exam will be marked out of 100. You will have 2 hours to do the exam. There are two parts to this exam. The first part is true-fal
COMM/FRE 295
Assignment #1
Question 1
a) Derive the reaction function for Farmer A when the two farmers play Cournot- Nash
quantity competition game. If Farmer B chooses to increase production by one unit, by
how much will Farmer A choose to change its op
UBC Commerce/ FRE 295 MIDTERM EXAM SOLUTIONS October 27, 2004 v1
NAME:_ STUDENT NUMBER _ SECTION: _ PROFESSORS NAME: _ Instructions: This exam will be marked out of 100. You will have 2 hours to do the exam. There are two parts to this exam. The first par
UBC
COMM 295
Solution to Assignment #2
Question #1
Suppose the Vancouver nightclub scene consists of a large number of identical, perfectly
competitive clubs that provide an identical nightlife experience and sell this experience to
consumers. Each clubs
a)
If Bob is risk neutral, then he only cares about the expected value of the investments. He
will choose the investment with the highest expected value.
EV of real estate investment
(0.25)(50,000) + (0.50)(0) + (0.25)(-35,000) = $3750
EV of t-bills inves
UBC
Comm 295
Game Theory Practice Questions #9
Q 1. Two firms at the St. Louis airport have franchises to carry passengers to and
from hotels in downtown St. Louis. These two firms, Metro Limo and Urban
Limo, operate nine passenger vans. These duopolists
Managerial Economics - End of Chapter Questions: Ch. 10 -15
Chapter 10 (Pricing).
1. Starting in 2002, seven pharmaceutical companies announced a plan to provide low-income elderly
people with a card guaranteeing them discounts of 20% or more on dozens of
Managerial Economics
End of the Chapter Questions
Chapter 2 (Supply and Demand)
1. Does an increase in average income cause a shift of the demand curve for avocados or
a movement along the demand curve? Explain briefly.
2. Both the U.S. and Canadian deman
Managerial Economics - End of Chapter Questions: Ch. 10 -15
Chapter 10 (Pricing).
1.
Starting in 2002, seven pharmaceutical companies announced a plan to provide low-income
elderly people with a card guaranteeing them discounts of 20% or more on dozens of
Answers to Selected Questions Ch 2 - 9.
Chapter 2
1. Does an increase in average income cause a shift of the demand curve for avocados or a movement
along the demand curve? Explain briefly.
Answer: Draw the graph with quantity on the horizontal axis and p
Topic 2
Elasticity and Demand
Estimate
(Chapter 3)
Ratna K. Shrestha
3.1 Price Elasticity of Demand
It measures the percentage change in the
quantity demanded of a good that results
from a one percent change in price.
E
D
P
% Q dQ Q
P dQ
=
=
=
% P
dP P
Q
Topic 1
Supply and Demand
(Chapter 2)
Ratna K. Shrestha
The Market Forces of
Supply and Demand
Supply and Demand are the forces that
make market economies work!
The terms supply and demand refer to the
behavior of producers and consumers. . . as
they inte
Practice True and False (Complete)
1. A competitive market has a demand curve given by QD = 21 P. The supply curve is QS = P + 5.
True
False
c) If at each price the quantity demanded were to double, the equilibrium price would also
double.
d) If at each p
COMM 295 (Secion 1 and 2) Practice True and False
1. A competitive market has a demand curve given by Q D = 21 P. The supply curve is QS =
P + 5.
True False
c) If at each price the quantity demanded were to double, the equilibrium price
would also double.
COMM 295 Practice #11
Moral Hazard/Org. of Firm Questions
1. Your firm needs to hire a lawyer to defend your firm against a $1,000,000 lawsuit. There
are two types of lawyers (equal number of each). If you get a good lawyer, the probability
of a successfu
UBC
Comm/Fre 295
Practice Problems
Asymmetric Information
1. A firms short-run revenue is given by R = 10e - e2, where e is the level of effort by a typical
worker (all workers are assumed to be identical). A worker chooses his level of effort to
maximize
Comm 295
Practice Problems
#8 Monopolistic Competition and Oligopoly
1. Consider two firms facing the demand curve P = 10 - Q, where Q = Q 1 + Q2. The
firms cost functions are C1(Q1) = 4 + 2Q1 and C2(Q2) = 3 + 3Q2.
a.
Suppose both firms have entered the i
Comm/Fre295
Externality
Solution to Practice Questions
1. In a market for dry cleaning, the inverse market demand function is given by
P 0 andthe(private)marginalcostofproduction fortheaggregation ofalldry
=
1Q
0
CQ
= .
1
0
cleaning firms is given by M+
Topic 03
Costs Of Production
(Chapter 6)
Ratna K. Shrestha
Cost Function
Production technology, together with prices
of factor inputs, determines the firms cost of
producing a desired level of output.
In a production process, a managers
objective is to ch
Topic 04
Organization of the Firm
(Chapter 7)
Ratna K. Shrestha
Overview
During the economic crisis of 2008 and
2009,US government bailed out many
insurance and auto companies. AIG (America
International Group) received more than $173
billion federal fund
Topic 05
Competitive Market
(Chapter 8)
Ratna K. Shrestha
8.1 Perfect Competition
Basic assumptions:
1. Price taking: The individual firm/buyer
sells/buys a very small share of the total
market output and, therefore, cannot
influence market price.
2. Pro
a)
If Bob is risk neutral, then he only cares about the expected value of the investments. He
will choose the investment with the highest expected value.
EV of real estate investment
(0.25)(50,000) + (0.50)(0) + (0.25)(-35,000) = $3750
EV of t-bills inves
Competition Consumer
Surplus
Clicker a
Price is P = 4 and cost C(q) = 5 + 3q2. What level of q maximizes
profits? Hint: set P = MC and then solve for q as a function of P.
a)
q* = 4/6 = 2/3
b)
q* = 6/4 = 3/2
c)
q* = 4/3
d)
q* = 3/4
e)
None of the above
C
Cartel Oct 17
i-Clicker Question 1
Inverse industry demand is P = 100 - 2(Q1 + Q2).
Firm 1 has MC = 25 and Firm 2 has MC = 20. If the two
firms collude and form a cartel:
a) Optimal cartel output is equal to 20 and each firm
will produce 10
b) Optimal car
Iclicker
questions
Demand and supply
Clicker 2a
The large decrease in the world price of oil in 2015 shifted the demand for public
transit:
a) in (to the left)
b) out (to the right)
Clicker 2b
Suppose in Figure 2.2 the $0.55 increase in the price of tomat