CHAPTER 15
Imperfect Competition
The problems in this chapter provide the student with some practice with many of the different models of imperfect competition introduced in the text. Space considerations forced us to omit problems on search, advertising,

Following sections are OMITTED CHAPTER 8 Incomplete Information 268 Simultaneous Bayesian Games 268 Signaling Games 273 Experimental Games 281 Evolutionary Games and Learning 282 Extensions 288 CHAPTER 9 Extensions 320 CHAPTER 10 Extensions 355 CHAPTER 11

CHAPTER 3
PREFERENCES AND UTILITY
These problems provide some practice in examining utility functions by looking at indifference curve maps and at a few functional forms. The primary focus is on illustrating the notion of quasi-concavity (a diminishing MR

CHAPTER 4
UTILITY MAXIMIZATION AND CHOICE
The problems in this chapter focus mainly on the utility maximization assumption. Relatively simple computational problems (mainly based on Cobb-Douglas and CES utility functions) are included. Comparative statics

CHAPTER 5
INCOME AND SUBSTITUTION EFFECTS
Problems in this chapter focus on comparative statics analyses of income and own-price changes. Many of the problems are fairly easy so that students can approach the ideas involved in shifting budget constraints

45 Chapter 7: Uncertainty and Information
Analytical Problems 7.9 HARA utility. This problem shows that the harmonic absolute risk aversion utility function is compatible with other frequently used forms. These other forms are just special cases of the HA

CHAPTER 8
STRATEGY AND GAME THEORY
These problems cover a variety of different concepts introduced in the chapter. They range in difficulty from the simplest exercise of finding the Nash equilibrium in a twoby-two matrix to characterizing equilibrium when

CHAPTER 9
PRODUCTION FUNCTIONS
Because the problems in this chapter do not involve optimization (cost minimization principles are not presented until Chapter 9) they tend to have a rather uninteresting focus on functional form. Computation of marginal and

CHAPTER 10
COST FUNCTIONS
The problems in this chapter focus mainly on the relationship between production and cost functions. Most of the examples developed are based on the Cobb-Douglas function (or its CES generalization) although a few of the easier o

CHAPTER 11
PROFIT MAXIMIZATION
Problems in this chapter consist mainly of applications of the P = MC rule for profit maximization by a price-taking firm and some examination of the firms derived demand for inputs. A few of the problems (13.2-13.5) ask stu

AP/ECON 4010: ADVANCED MICROECONOMIC THEORY PRACTICE MIDTERM SECTION A: Short Answers. Explain briefly but clearly why each of the following statements is true, false or uncertain. 1. Indifference curves are convex to the origin because marginal utility i

ANSWERS TO 4010 MIDTERM Short Answers: 1. False. DMRS only ensures convex indifference curves and, therefore, downward sloping compensated demand. It follows from Slutsky equation that if income effect is sufficiently negative (as in the case of Giffen go

SECTION A: Short Answers 1. False. Diminishing MU is not required for DMRS. The condition for DMRS is: f22f11 2f1f2f12 + f12f22 < 0, which may be true even if f11, f22 > 0, ie MUs were increasing. 2. True. Since raising the function to the power 1/( + ) i

CHAPTER 12
THE PARTIAL EQUILIBRIUM COMPETITIVE MODEL
The problems in this chapter focus on competitive supply behavior in both the short and long runs. For short-run analysis, students are usually asked to construct the industry supply curve (by summing f

CHAPTER 14
MONOPOLY
The problems in this chapter deal primarily with marginal revenue-marginal cost calculations in different contexts. For such problems, students' primary difficulty is to remember that the marginal revenue concept requires differentiati