National University of Singapore
Department of Economics
EC 3101 Microeconomic Analysis II
Semester 1 AY 2014/2015
Practice Problem Set 2
Monopoly (C.24)
Question 3.1
Orange is the only firm that sells consumer good X. Show that if the demand
for
Problem Set #8
1. Joey has a sandwich shop located next to Chandlers cigarette store in a small shopping
mall. The number of customers who frequent the mall to shop at either store depends on
the amount of money the store spends on advertising in a day. I
National University of Singapore
Department of Economics
EC 3101 Microeconomic Analysis II
Semester 1 AY 2014/2015
Practice Problem Set 4
Oligopoly (C.27)
Question 5.1
In Pulau Kawai, consumers purchase smartphones without a phone plan.
There are
National University of Singapore
Department of Economics
EC 3101 Microeconomic Analysis II
Semester 1 AY 2014/2015
Practice Problem Set 1
Intertemporal Choice (C.10), Uncertainty (C.12)
Question 1.1
Margaret has a utility function U(c1, c2) = c1+c
EC3101 Homework Problem Set 1
The written solution is due on Friday, September 19, at 5 pm. The solution must
be dropped in the mailbox of Indranil Chakraborty on the 6th
oor of AS-2 near the
Economics General O ce. Please write your (i) name, (ii) matri
National University of Singapore
Department of Economics
EC 3101 Microeconomic Analysis II
Semester 1 AY 2014/2015
Practice Problem Set 1
Intertemporal Choice (C.10), Uncertainty (C.12)
Question 1.1
Margaret has a utility function U(c1, c2) = c1+c
CHAPTER TEN:
INTERTEMPORAL CHOICE
1
Intertemporal Choice
Consumers are deciding how to allocate
consumption of a good between two
periods: 1 vs. 2 .
The price of consumption is given by
the interest rate .
If > 0, consuming in period 2 is
cheaper because
Chapter 12:
Uncertainty
Recap
Last week, we introduced the concept of
uncertainty:
There are different states of nature that can
occur
How do we make decisions in light of these
different states?
2
Recap
We ended the lecture discussing utility
in the face
EC 3101
Microeconomic
Analysis II
Instructor: Dr Joanne Roberts
1
My contact information
EMAIL:
ecsrjk@nus.edu.sg
PHONE:
65163959
OFFICE:
AS2 05-16
OFFICE HRS:
Tuesday 11am 1pm or by appointment
2
Textbook
Intermediate
Microeconomics
A Modern Approac
MONOPOLY
Week 4
(Chapter 24, except Appendix)
Monopoly
Board Game developed during the
Great Depression
Properties include:
22 streets in Atlantic City (New
Jersey), divided into 8 color
groups; a player must own all of a
color group to build houses or
h
EXCHANGE
Week 3
Chapter 31
(except 31.8 and example in pp. 598-600)
1
Exchange
Edgeworth and Bowley devised
a diagram, called an Edgeworth
box, to show all possible
allocations of the available
quantities of goods 1 and 2
between the two consumers.
2
Exc
Externalities; Public Goods
Week 11
Chapter 34 (except 34.1 and 34.2)
Chapter 36 (pp. 694-703)
1
Todays Plan
1. Externality
The concept
An example
Internalizing Externality
Coase Theorem
Tragedy of the Commons
2. Public Good
The concept
The Free Ri
GAME APPLICATIONS I
Week 9
(Chapter 29)
1
We have seen the following games
Simultaneous games
Often represented using Payoff Matrix (Normal Form)
Find Best Responses and Nash Equilibrium
Sequential games or Finitely Repeated games
Often represented u
OLIGOPOLY
PART I : QUANTITY COMPETITION
Week 5
(Chapter 27 optional reading)
We have seen two extremes
Perfect competition
A large number of firms producing homogeneous product
Firms have no market power
Monopoly
Only one firm in the market
Monopoli
National University of Singapore
Department of Economics
EC 3101 Microeconomic Analysis II
Semester 1 AY 2014/2015
Practice Problem Set 4
Oligopoly (C.27)
Question 4.1
Alex and Anna are the only sellers of kangaroos in Sydney. Anna chooses her
pro
National University of Singapore
Department of Economics
EC 3101 Microeconomic Analysis II
Semester 2 AY 2014/2015
Practice Problem Set 3
Monopoly (C.24)
Question 3.1
Orange is the only firm that sells consumer good X. Show that if the demand
for
National University of Singapore
Department of Economics
EC 3101 Microeconomic Analysis II
Semester 1 AY 2014/2015
Practice Problem Set 3
Oligopoly (C.27)
Question 4.1
Alex and Anna are the only sellers of kangaroos in Sydney. Anna chooses her
pro
GAME APPLICATIONS I
Week 8
(Chapter 30)
1
Plan for this lecture
1. Reinforcing concepts
Nash equilibrium and dominant strategies
2. Mixed Strategy Nash Equilibrium
2
We have seen the following games
Simultaneous games
OPen represented using
EXCHANGE
Week 3
Chapter 32
(except 32.8, 32.11, 32.13, and example in pp. 617-619)
1
Exchange
Edgeworth and Bowley devised
a diagram, called an Edgeworth
box, to show all possible
allocaLons of the available
quanLLes of goods 1 and 2
betwe
UNCERTAINTY
Week 2
(Chapter 12, except Appendix)
1
Uncertainty is Pervasive
What is uncertain in ones economic life?
Tomorrows house prices
Future health
Present and future acJons of other people
What are raJonal responses to uncertainty?
OLIGOPOLY
PART II : COLLUSION & PRICE COMPETITION
Week 5-6
(Chapter 28 opBonal reading)
The Big Picture
Nature of compeBBon among oligopolisBc rms depends on
how they interact
Q
N
Do they
cooperate?
Y
Do they act
simultaneously or
sequenBall
Problem Set #4
1. Consider a Cournot Duopoly. Call them Firm 1 and Firm 2. They face inverse
demand P(Q) = 20 - Q, where Q is the total market quantity (Firm 1's quantity plus
Firm 2's quantity). Firm 1 can produce at a constant marginal cost of 2 and Fir
EC3101: Problem Set #1 for Week 3 Discussion Groups
1. Calculate the following:
a. The present value of $1,000,000 delivered 20 years in the future if the interest rate
is 20%.
b. The value of $1,000,000 20 years from now if the interest rate is 15%
c. Th
Problem Set #7
1. The Hawk-Dove game was first used by biologist John Maynard Smith to illustrate the
uses of game theory in the theory of evolution. Males of certain species frequently come
into conflict with other males over the opportunity to mate with
Problem Set #6
1. Consider again the, Battle of the Sexes, game below, where both players make
simultaneous action choices.
Jacob
Erica
Movies
Laser Tag
Movies
2,1
0,0
Laser Tag
0,0
1,2
a. What are the pure strategy Nash equilibria of this game?
Now consi
Problem Set #2
1. Johns utility function is () = ln(). He purchases a risky asset that pays $404 with
probability 0.6 and $1097 with probability 0.4. What is the risk premium associated with
this asset?
2. Robinson Crusoe and Chuck Noland consume coconuts
Announcement
Since September 11th is Polling Day,
Homework #1 will be due Monday ,
September 14th at 9 a.m.
Please place them in your TAs mailbox
I will post solutions to IVLE as soon as all
homework assignments are accounted for.
You can pick up your gra
National University of Singapore
Department of Economics
EC 3101 Microeconomic Analysis II
Semester 1 AY 2014/2015
Practice Problem Set 5
Exchange (C.31)
Question 5.1
An economy has two people, Ah Meng and Jojo. There are two goods, bananas and
2
GAME APPLICATIONS II
Week 10
(Chapter 29)
1
Best Responses Curves
No need to know how to draw best response curves
A
Bs best
response
1
1
A
As best
response
1
1
4/
7
0
0
1
B1
0
0
1
B1
2
Some Important Types of Games
Games of coordination
Games of competit
UNCERTAINTY
Week 2
(Chapter 12, except Appendix)
1
Uncertainty is Pervasive
What is uncertain in ones economic life?
Tomorrows house prices
Future health
Present and future actions of other people
What are rational responses to uncertainty?
Diversif
Asymmetric Information
Week 12
Chapter 37 (pp. 718-729)
1
Information in Competitive Markets
In purely competitive markets, all agents are fully
informed about traded commodities and other aspects of
the market
In reality, agents have imperfect informat
OLIGOPOLY
PART II : COLLUSION & PRICE COMPETITION
Week 6
(Chapter 27 optional reading)
The Big Picture
Nature of competition among oligopolistic firms depends on
how they interact
Q
Do they act
simultaneously or
sequentially?
Sim
Do they compete
on price
GAME THEORY
Week 8
(Chapter 28)
1
Part 1
SIMULTANEOUS-MOVE GAMES
2
Prisoners Dilemma
Two suspects of a crime, Chandler and Joey are
arrested and are held in separate cells
Each of them is privately told that
If he confesses and the other person does no