Econ 208
Akerlof
Assessed Problem Set 1
1.
Decide whether each of the following three statements is True, False, or Uncertain, and give a
brief but clear explanation why.
a)
b)
Your company lost a court case and must pay 20 for every snowmobile it produce
Akerlof
Econ 208
Assessed Problem Set 2
1. Suppose Badoit and Evian are the only two suppliers of bottled water and
they engage in Bertrand competition. Neither company has any
production costs. Badoit and Evia
Econ 208
Akerlof
Practice Problem Set 1
1. True, False, or Uncertain: (Explain why): A firm whose marginal cost is
increasing can still be experiencing economies of scale.
2. Daily Herald, the oldest newspaper in Historictown, owns a building called
The B
ECON 208
Akerlof
Solutions: Practice Problem Set 1
1. TRUE
When a firm experiences economies of scale, its average cost is decreasing with
output. Economies of scale consider the average cost of production for the entire
amount of output produced, whereas
Akerlof
Econ 208
Practice Problem Set 2
1. Oil tankers can be produced at a marginal cost of 200 million pounds. The demand
for tankers is given by the following equation:
Qd = 10 4p,
Where Q is the number of oil tankers in thousands, and p is the price i
(a)
(b)
(c)
(d)
(e)
1
2
3
xi
8
if individual is 17-25 years old
if individual is 26-40 years old
if individual is >75 years old
3
1 if in quarter j
yt 1 x1t 2 x1t 1 j Q jt t , where Q jt =
otherwise
j 1
0
0
0
ui ,1u j ,1
0
ui ,2u j ,2
0
ij
T T
0