Econ 200
Exam 1
Summer 2011
True/False
Indicate whether the statement is true or false.
_
1. A hypothesis is a normative statement.
_
2. When two variables repeatedly change at the same time, there must be a causal relationship between them.
_
3. The oppo
Econ 601
Graduate Microeconomics
Problem Set IX
Lau
Fall 2011
Probability
1.
Suppose that when a machine is adjusted properly, 90% of the items produced by it are of high
quality and the other 10% are of medium quality. Suppose, however, that the machine
Graduate Microeconomics
Man-lui Lau
2
I.
Consumer Theory
Consumer theory is developed to
i)
explain the consumption pattern of an individual (household/family) and
ii)
carry out welfare analysis of an individual (household/family).
Indifference Curve Anal
Econ 601
Graduate Microeconomics
Lau
Fall 2011
Problem Set V
Elasticity
1.
Let U ( X , Y ) X a Y b , a b 1
a)
find the Marshallian demand functions,
b)
find the indirect utility function,
c)
using the duality identities, find the expenditure function,
d)
Econ 601
Graduate Microeconomics
Lau
Problem Set II
General Equilibrium I
1.
Suppose there are 2 price-taking consumers, consumer A and consumer B. Consumer A has an
initial endowment of ( X , Y ) (1,0.5) and an utility function of U ( X , Y ) XY . Consum
Econ 601 Graduate Microeconomics
Problem Set IV
Lau
Fall 2011
Hicksian Demand, Expenditure Function and Duality
For each of the following utility functions,
1.
2.
3.
4.
5.
U ( X , Y ) min(2 X , Y )
U ( X , Y ) 3X Y ,
U ( X , Y ) X ln Y
U ( X , Y , Z ) min
Econ 601
Graduate Microeconomics
Problem Set VI
Lau
Fall 2011
Decision Under Uncertainty
1.
Consider a person with an initial wealth level of 100 who faces a chance to win 20 with
probability 1/2 and lose 20 with probability 1/2. If this person's utility
Econ 601
Graduate Microeconomics
Problem Set VIII
Lau
Fall 2011
Decision Under Uncertainty III
1.
a)
b)
c)
Derive the mean-variance frontier of 2 risky assets.
Derive the mean-variance frontier of 2 risky assets and 1 risk-free asset.
Explain how an inves
Econ 601
Graduate Microeconomics
Problem Set X
Lau
Fall 2011
Decision Under Uncertainty V
1.
Using the state-contingent claim analysis, show that
a)
if insurance is sold at a fair price, then a risk-averse individual will take out insurance
such that his
Econ 601 Graduate Microeconomics
Problem Set III
Marshallian Demand and Indirect Utility Function
For each of the utility function,
1.
1
3
1
3
U ( X ,Y ) X Y ,
[Hint: No need to set up the Lagrangian function. Use the short-cut formula.]
2.
U ( L, R) min(
Econ 200
Exam 1
Practice Exam
True/False
Indicate whether the statement is true or false.
_
1. It is possible to completely eliminate scarcity.
_
2. When two variables repeatedly change at the same time, there must be a causal relationship between them.
_
Analysis in Price Discrimination by Online Firms
Yujuan Chen
Abstract
Price Discrimination means the firm can charge different prices to different consumers for the same
product. This phenomenon has been already common in traditional market. However, onli
Chapter 11:
-explicit costs are the input costs that require monetary payment, the out of pocket
expenses that pay for labor services, raw materials.
-implicit costs do not require an outlay of money. opportunity costs are less visible than
explicit costs
Chapter 12:
-a firm must ask what price should we charge for the goods and services we sell and
how much should we produce?
-in a perfectly competitive market, the market price is the critical piece of information
that a firm needs to know. (price takers)
Chapter 13:
-monopoly=the single supplier of a product that has no close substitute. pure monopoly
is a market with a single seller because it is a sole supplier, a monopoly faces the
marker demand curve for its product.
-monopolist has control over the m
Chapter 14:
-monopolisric competions=a market structure with many firms settling differentiated
products
-product differentiation=goods or services that are slightly different or perceived to be
different from one another
-excess capacity=occurs when the
chapter 15:
-mutual interdependence=when a firm shapes its policy with an eye to the policies of
competing firms
-oligopoly means few sellers.
-collusion=when firms act together to restrict competition.
-cartel=a collection of firms that agree on sales, p
chapter 16:
-marginal revenue product=marginal product times the price of the product
-marginal resource cost=the amount that an extra input adds to the firms total cost
-marginal product=the change in total output of a good that results from a one unit
c
Chapter 17:
-in kind transfers= in kind transfers are transfers in the form of goods and services
instead of money, in kind transfers includes food stamps, housing, and subsidies.
-permanent income hypothesis=the hypothesis that consumption is more closel
chapter 18:
-comparative advanage=occurs when a person or country can produce a good or
service at a lower opportunity cost than others
-consumer surplus=the difference between the price a consumer is willing and able to
pay for an additional unit of a go
Econ 601
Graduate Microeconomics
Lau
Fall 2011
Problem Set VII
Decision Under Uncertainty II
1.
Suppose a person has $M of money. If she puts the money in the bank, she can get a return of
10% over a period. If she buys an asset X, she has 50% of chance t