Lecture 9. Game Theory
ECOS2901 Intermediate Microeconomics Honours
Semester One 2014
Stephen L. Cheung
The University of Sydney
Stephen L. Cheung
Lecture 9. Game Theory
1
Strategic form games
Game theory is an extension of choice theory to situations in

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 6
1. Banerjee, Chapter 7, Exercise 7.1, parts (c) and (e).
2. Homework only: Banerjee, Chapter 7, Exercise 7.2, parts (d) and (e).
3. Consider a firm that produces a single out

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 4
1. Banerjee, Chapter 11, Exercise 11.6. (Note: in Banerjee, the vNM utility function is what
we are calling the Bernoulli utility function.)
2. A homeowner owns a property wi

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 8
1. Consider the profit function ( p, w1 , w2 ) = p2 / (w1 + w2 ) . Verify that the function is homogeneous of degree one in ( p, w1 , w2 ), and use Hotellings lemma to obtain

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 11
1. Find a mixed-strategy Nash equilibrium in the asymmetric matching pennies game on
Slide 12 of Lecture 9. Illustrate the equilibrium on a diagram depicting the two players

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 13
1. For each of the games below, suppose that the game is played exactly two times. Can you
propose a subgame-perfect strategy combination that will sustain the outcome ( B,

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 7
1. Banerjee, Chapter 8, Exercise 8.4, part (c).
2. The production function for a firm is given by:
q=2 x
where q denotes output and x denotes hours of labour input. The firm

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 2
1. On slide 11 of Lecture 1 it is stated that: The assumption of transitivity implies that
indifference sets do not intersect, for example y x and z y but z x. Use the
defini

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 3
1. Banerjee, Chapter 4, Exercise 4.1, parts (a), (b), and (c).
2. A consumer has an income of 100 dollars which he plans to spend on two commodities.
The price of the first c

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 9
1. If not completed last week: Banerjee, Chapter 6, Exercise 6.5.
2. Consider an economy that produces two goods, bread (B) and fish (F), using two inputs,
1
1
1
1
L and K. T

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 10
1. Two individuals, A and B, have identical preferences over a pure public good G and a
private good x:
ui ( G, xi ) = G xi
i = A, B.
where G is total supply of the public g

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Answers to the Second Mid-Semester Test
1.
(a) Note first that TRS = x2 /2x1 . Equate this to w1 /w2 to find x2 = 2w1 x1 /w2 . Use this to
3
1 2
eliminate x2 from the production function to find q =

Lecture 8. Externalities and Public Goods
ECOS2901 Intermediate Microeconomics Honours
Semester One 2014
Stephen L. Cheung
The University of Sydney
Stephen L. Cheung
Lecture 8. Externalities and Public Goods
1
Externalities
An externality is an external e

Lecture 7. General Equilibrium and Welfare
ECOS2901 Intermediate Microeconomics Honours
Semester One 2014
Stephen L. Cheung
The University of Sydney
Stephen L. Cheung
Lecture 7. General Equilibrium and Welfare
1
Introduction
In this lecture we will study

Lecture 10. Oligopoly
ECOS2901 Intermediate Microeconomics Honours
Semester One 2014
Stephen L. Cheung
The University of Sydney
Stephen L. Cheung
Lecture 10. Oligopoly
1
Introduction
An oligopoly is a market made up of a small number of rms who
interact s

Lecture 11. Repeated Games
ECOS2901 Intermediate Microeconomics Honours
Semester One 2014
Stephen L. Cheung
The University of Sydney
Stephen L. Cheung
Lecture 11. Repeated Games
1
One-shot Prisoners' Dilemma
Consider the following simultaneous-move game,

Lecture 5. Technology and Cost
ECOS2901 Intermediate Microeconomics Honours
Semester One 2014
Stephen L. Cheung
The University of Sydney
Stephen L. Cheung
Lecture 5. Technology and Cost
1
Technology and production function
We switch gears, and turn to the

ECOS2901
Intermediate Microeconomics Honours
Dr. Cheung
Tutorial Work for Week 12
1. Consider a Cournot oligopoly market with three symmetric firms. The market inverse
demand function is p = 140 Q, where Q is the aggregate output of all firms in the
marke

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ECOS2901 Intermediate Microeconomics Honours
Semester One, 2016
Second Mid-Semester Test
Time allowed: Fifty minutes (plus ten minutes reading time).
Answer both questions 1 and 2 in a single answer book. Answer all parts of bo

3439, Semester 1 2014.
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ECOS2901: INTERMEDIATE MICROECONOMICS HONOURS
FINAL EXAMINATION
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