In class problems Chapter 12: Oligopoly
Given the following inverse demand curve: P(Q) = 100 5Q
Assume two firms are Cournot competitors, and both firms face the following cost
curves: C(q) = 10Q
1) Find both firms best response functions (reaction curves
ECON 600
Practice Problems 5
1. Suppose two individuals (Smith & Jones) each have 10 hours of labor to devote to
producing either ice cream (x) or chicken soup (y). Smiths utility function is given by
U s x .3 y .7 ,
whereas Jones is given by
U j x .5 y .
Econ 600  Advanced Microeconomics
Practice Problems 4
Due: 15 October, 2010
Question 1: Compare the Pareto Efficient Allocations in the following cases in
Edgeworth Boxes:
a) Person A does not care at all about her consumption of good 2 and person B
does
Practice Problems Answers
1. Draw a typical budget and illustrate what happens when the price of either good changes
and/or income changes.
When the price of a good increases (decreases) the budget constraint will rotate in (out) along that
goods axis. Wh
Econ 600  Advanced Microeconomics
Practice Problems 2
Question 1: Compare the Pareto Efficient Allocations in the following cases in
Edgeworth Boxes:
(a) Person A does not care at all about her consumption of good 2 and person B
does not care at about hi
ECON 600
Practice Problems I
1. Suppose two individuals (Smith & Jones) each have 10 hours of labor to devote to
producing either ice cream (x) or chicken soup (y). Smiths utility function is given by
U s x .3 y .7 ,
whereas Jones is given by
U j x .5 y .
Lecture 8: Cost Functions
Cost Minimization and the Cost Function
Because any profit maximizing firm wants to minimize the cost of producing any
given level of output, we start with the problem of minimizing a firms total cost. In terms of
our single prod
ECON 600: ADVANCED
MICRO ECONOMICS
Lecture 3
Topics to be covered:
a. CobbDouglas Utility Function
b. Ces Utility Function
c. Indirect Utility Function
d. Lumpsum Taxation
e. Ad valorem Taxation of one Good
f. Expenditure Minimization
0
ECON 501
Nichols
5.1
These goods are perfect substitutes. That is why it has a linear indifference
curve. 1 unit of X is equivalent to 3/8th unit of Y
You cannot use FOC under this case.
Entire money is spent on X if 3/8Px<Py (since X is cheaper) You can spent any
mount o
Econ 600 Microeconomic Theory
Study Guide for Midterm 2
Major Topics:
1. Choice Under Uncertainty
a. Expected Value vs. Expected Utility
i. Determining Risk Behavior
1. Risk averse, loving, neutral
b. Insurance
i. Reservation price
Kahneman and Tversky
a.
Econ 600
Practice Test
Answer all questions. Please take no more than 6 hours to complete this exam, and use
only your text as a reference. The test should be delivered to my (by mail, by hand or by
email) by 8:00 a.m. Wednesday May 12, 2004. (Note: I inc
Reading.
Problems:
Chapter 6 (pp. 152170) for today
To collect: Ch. 5. 5.6, 5.7, 5.8, 5.9
For next time: Ch. 6. 6.1, 6.3, 6.5
Test next time.
Lecture #7
REVIEW
E. Compensated Demand
1. Relationship between Compensated and Uncompensated
Demand
F. A Mathem
Reading.
Chapter 5 (pp. 116130) for today
Chapter 5 (pp. 130144) for next
time
Problems:
To collect: Ch. 4: 4.2, 4.4, 4.6, 4.7
4.9
Next time: Ch. 5 5.1 5.2 5.4
Observe: 5.1 and 5.2 dont fit into the
standard Lagrangian setup, because, in each case, the
Econ 600
Problem Set #15
KEY
1. Statistical evidence indicates that equations defining the demand and supply functions
of 1 pound bags of Starbucks Coffee at The Ukrops near VCU to be
Qd
Qs
=
=
is the price of a 1 pound bag of coffee
is the price of maple
ECON 600
Problem Set #14
Suggested Answers to Problems 11.1, 11.3, 11.5, 11.6 and 11.7
11.1 Digging clams by hand in Sunset Bay requires only labor input. The total number of
clams obtained per hour (q) is given by
q = 100L
where L is labor input per hour
ECON 600
Problem Set #13
Suggested Answers to Problems 6.9, 7.1; 7.3, 7.5 and 7.9
6.9 A utility function is termed separable if it can be written as
U(X, Y) =
U1(X) +
U2(Y)
Where Ui > 0 and Ui< 0, and U1 and U2 need not be the same function.
a. What does
ECON 600
Problem Set #12
Suggested Answers to Problems 6.1; 6.3 and 6.5
6.1. Hiedi receives utility from two goods, goats milk (M) and strudel (S), according to
the utility function
U(M,S)=
MS
a. Show that increases in the price of goats milk will not aff
ECON 600
Problem Set 11
Problem Key: Ch. 5. 5.6, 5.7, 5.8, 5.9
Suggested Answers
5.6 Suppose than an individuals utility for X and Y is represented by the CES function
(for =1):
utility =
U(X,Y)
=
1/X

1/Y
a. Use the Lagrangian multiplier method to cal
Econ 600  Advanced Microeconomics
Assignment # 10
Question 1: Compare the Pareto Efficient Allocations in the following cases in
Edgeworth Boxes:
a) Person A does not care at all about her consumption of good 2 and person B
does not care at about his con
ECON 600
Problem Set 9
Problem Key: Ch. 5. 5.6, 5.7, 5.8, 5.9
Suggested Answers
5.6 Suppose than an individuals utility for X and Y is represented by the CES function
(for =1):
utility =
U(X,Y)
=
1/X

1/Y
a. Use the Lagrangian multiplier method to calc
ECON 600
Problem Set #8
Problems 5.1, 5.2 and 5.4.
5.1. Thirsty Ed drinks only pure spring water, but he can purchase it in two differentsized containers  .75 liter and 2 liter. Because the water itself is identical, he regards
these two goods as perfect
ECON 600
Problem set 7
Suggested Answer Key.
Problems 4.2, 4.4, 4.6, 4.7 and 4.9
4.2
a. A young connoisseur has $300 to spend to build a small wine cellar. She enjoys two
vintages in particular: an expensive 1987 French Bordeaux (WF) and $20 per bottle an
Econ 600
Suggested Repsonses
Problem Set #6. Chapter 3, Problems 3.2, 3.4, 3.5, 3.7
3.2. Suppose the utility function for two goods, X and Y, has the CobbDouglas form
utility =
U(X,Y)
=
(XY)1/2
a. Graph the U=10 indifference curve associated with this ut
Econ 600. Problem Set #5. Chapter 3, Problems 3.2, 3.4, 3.5, 3.7
3.2. Suppose the utility function for two goods, X and Y, has the CobbDouglas form
utility =
U(X,Y)
=
(XY)1/2
a. Graph the U=10 indifference curve associated with this utility function
20
1
ECON 600
Suggested Answers to Problem Set #4
(Problems 2.3, 2.5, 2.6, 2.9)
2.3. The height of a ball t seconds after it is thrown straight up is 1/2gt2 + 40t (where g is
the acceleration due to gravity)
a. If g=32 (as on the earth), when does the ball re
ECON 600
Suggested Answers to Problem Set #3
(Problems 2.3, 2.5, 2.6, 2.9)
2.3. The height of a ball t seconds after it is thrown straight up is 1/2gt2 + 40t (where g is
the acceleration due to gravity)
a. If g=32 (as on the earth), when does the ball re
Econ 600  Advanced Microeconomics
Assignment # 2
Question 1: Compare the Pareto Efficient Allocations in the following cases in
Edgeworth Boxes:
a) Person A does not care at all about her consumption of good 2 and person B
does not care at about his cons
ECON 600
Homework 1
1. Consider the following utility functions
U(X,Y)
=
=
=
XY
X+Y
min (X,Y)
a. Develop the MRS for each utility specification.
b. For each function, draw illustrative indifference curves.
Y
Y
Y
X
U(X,Y) =
XY
X
X+Y
X
Min(X, Y)
b. Suppose
Econ 600
Exam 1
Fall 2014
Note: You may use your notes and your text on this examination. However, do not talk
with each other about this exam. Return this examination to me by 5 p.m. Saturday
March 13.
1) Consider the utility function U(X,Y)
= X2Y
a) Is