Perfect Competition
Price Determination in the Short Run
Practice Problems and Solutions
March 21, 2006
Problem 1 Cell phone market supply is Qs = 5P 100 if P 20 and
Q = 0 otherwise, where Q is the number of customers (in thousands) served
per month.
1. I
PRACTICE PROBLEMS FOR THE FINAL EXAM
Note: in the actual exam you will have 15 multiple choice questions+2 essay
questions in the compulsory part and a choice between an additional essay question
and 5 additional multiple choice questions.
Grading weights
Plan
General Equilibrium and
Market Efficiency
Production Economy
Pure exchange economies
Definition of a Pareto Efficient allocation
Competitive equilibrium allocation
First Welfare Theorem
Second Welfare Theorem
Production Economies
Production Po
INTERMEDIATE MICROECONOMIC
THEORY
Spring 2007, Homework 3
Due Thursday March 1 (prior to
commencement of lecture)
Carefully show how you derive you answer and be sure to interpret your
answer where necessary.
1. Jasons preferences over peanuts (y) and alm
INTERMEDIATE MICROECONOMIC
THEORY
Suggested Solutions to Homework 3
Carefully show how you derive you answer and be sure to interpret your
answer where necessary.
1. Jasons preferences over peanuts (y) and almonds (x) are given by
U (x, y) = xy + 10 (x +
HW 6
Solutions
May 2, 2007
Problem 1 a. 13.14, p. 517. Use the information about cobalt industry
from this problem to answer additional questions.
b. Assume there are only two rms competing against each other in
Cournot fashion. Compute the equilibrium qu
INTERMEDIATE MICROECONOMIC THEORY Homework
2 solution
Q1.
(2C + 2) + 2C
4C
C
= 22
= 20
= 5
Plugging this result back into the tangency condition implies that F = 2(5)+
2 = 12. At the optimum the consumer chooses 5 units of clothing and 12 units
of food.
f
V. Monopoly
Practice questions with answers
April 12, 2007
1
Will a monopolist want to pricediscriminate?
Problem 1 Monopolist faces two markets: rail transport of coal and rail
transport of grain. For coal the inverse demand is Pc (Q) = 40 Q and
for gra
Solution to Practice Questions
Provide a sketch of a proof for the First
Welfare Theorem
April 11, 2006
Consider an economy with 2 inputs (K, L), 2 outputs (C, F ), 2 individuals. (A, E). There is a xed amount of inputs in the economy, total capital
amoun
Some games for you to play. Have fun!
(Please, look for Nash Equilibria along the way.)

GAME 6

Player B

+

B1

B2

+

 A1  30, 30  40, 20 
 Player A +

 A2  20, 40  35, 35 
+
1. In Game 6 above,
a. Player A has a dominant stra