Chapter 4 Econ notes
Vocab:
- Market: a group of buyers and sellers of particular good or service
- Competitive market: a market in which there are many buyers and many sellers so that
each has a negligible impact on the market place
- Quantity demanded:
Econ Chapter 2
Vocab:
- Circular flow diagram: a visual model of the economy that shows how dollars flow
through markets among households and firms.
- Production possibilities frontier: a graph that shows the combinations of output that the
economy can po
Chapter 5 Econ notes
Elasticity: measure of the responsiveness of quantity demanded or quantity supplied to a
change in one of its determinants
1. Price elasticity of demand: percentage change in quantity demanded divided by the
percentage change in price
Econ Chapter 1
Vocab
Scarcity: the limited nature of societys resources
Economics: the study of how society manages it scarce resources
Efficiency: the property of society getting the most it can from its scarce resources
Equality: the property of distrib
Problems on theory of production (Chapter 6)
1. A Company has an assembly line of fixed size A. Total output is a function of the number of
workers as shown in the following schedule:
No. of Workers (L)
Total Output (Q)
0
0
1
10
2
30
3
50
4
56
5
59
6
60
7
20 : Theory of Cost
1
Session Outline
Production cost
Types of Cost: Accounting/Economic Analysis
Cost Output Relationship
Short run cost Analysis
Prof. Trupti Mishra, School of Management, IIT Bombay
Cost of Production
Business decisions are generally ta
EC 705: Econometrics
Problem set 2
Please submit hard copy of your answers at class. No e-mail submission will be
accepted without any proper reason for absence.
1. Consider discrete random variables X and Y with the probability distribution shown below.
Q1.
Suppose a chair manufacturer is producing in the short run. The manufacturer has
observed the following levels of output.
Number of Workers
1
2
3
4
5
6
7
8
9
10
a)
b)
c)
d)
Total Product
10
18
24
28
30
30
28
25
21
15
Marginal Product
Average Product
C
EC 705: Econometrics
Answers to Problem set 1
Distribution of X
Answer to 3.
X
1
2
3
4
prob 1/6 1/6 1/6 1/6
5
6
1/6 1/6
It is convenient to make a table to calculate the expectation and the variance.
Prob X
P rob X
X E(X) (X E(X)2
P rob (X E(X)2
1/6
1
1/6
QUESTIONS
Q1. The demand for a profit-maximizing competitive firm is: Q = 600 - 2.5P; where P is the
price of the product and Q is the number of units produced. Suppose that the firms marginal cost
of production is $24. Calculate the firms profit-maximizi
Central Limit Theorem and Normal Distribution
You toss a coin. H is 1 and T is 0. You keep tossing a coin infinitely many
times. Let the random variable from n-th toss Xn . For example the random
variable from first toss is X1 . Note that all the random v
Producer Theory Practice Problems
Intermediate Micro
Chapter 7 Comparative Statics
1.
Use the information from an earlier problem that we did in class. You have the optimal
combinations of capital and labor and the level of output in your notes.
w = $5
r
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. Cobb-Douglas 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. 152-170) 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. 116-130) for today
Chapter 5 (pp. 130-144) 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