MBJZ03 Intermediate Econometrics I
Quiz 1 Answer key
Q1:
(1) P() = 6 > 0, x = 1,2,3
1
2
3
(2) 3=1 () = 3=1 6 = 6 + 6 + 6 = 1
This equation is a probability density function
Q2:
z
(a) = 10 2 6;
20 xy .
y
(b) z = 6x,
z
z
0.
6;
x
y
3 1
1 2
Q3: The inverse

Name:
Student number:
Class:
MBJZ03 Intermediate Econometrics I
Quiz 2
Q1: Can we estimate the following model by using OLS? Why?
=
Hint: this model is not linear but it can apply a suitable transformation into linear.
Q2: Given the regression results b

Name:
Student number:
Class:
MBJZ03 Intermediate Econometrics I
Quiz 1
Q1: Is the following equation a probability density function? Show your working
progress!
P() =
( 3 3)
7
for x = 2,3.
Hint: P() is a probability density function if 1) P() 0, < x < , 2

Name:
Student number:
Class:
MBJZ03 Intermediate Econometrics I
Assignment 2
Instructions: This assignment is due in Week 8. Hand in your work in your class in
week 8 (10/26). No extensions will be given, and late assignments will receive no
credit. If yo

Bill
Bertha Bob
Majority Vote Results
x beats y
Bill
Bertha Bob
x
y
z
x
y
z
y
z
x
y
z
x
z
x
y
z
x
y
Majority Vote Results
x beats y No
y beats z socially
z beats x best
alternative!
Majority voting does
not always aggregate
transitive individual
preferenc

Coconuts
More preferred
Technology: Labor produces output
(coconuts) according to a concave
production function.
24
RCs firms profit is = C - wL.
= C - wL
C = + wL, the
equation of an isoprofit line.
Slope = + w .
Intercept = .
0
Leisure (hours)
6
Coconut

2
Edgeworth and Bowley devised a
diagram, called an Edgeworth box, to
show all possible allocations of the
available quantities of goods 1 and 2
between the two consumers.
B
1
OB
2
6
B
2
OA
A
6
B
8
A
2
4
B
2
B
1
2
6
Width =
2
B
1
6
2
B
2
The
endowment
all

Similarly, given y1, firm 2s profit function is
Suppose firm 1 takes firm 2s output
level choice y2 as given. Then firm 1
sees its profit function as
1
1
2
1
2
1
1
2
1
1
2
2
2
Firm 1s reaction curve
y2
2
2
y1
60
So, given y1, firm 2s profit-maximizing
out

Player B
U
Player B
L
A game consists of
a set of players
a set of strategies for each player
the payoffs to each player for
every possible choice of
strategies by the players.
L
R
(3,9) (1,8)
Player A
D
(0,0) (2,1)
This is the
games
payoff matrix.
U
D

$/input unit
What if the firm is a monopolist in its
output market while still being a
price-taker in its input markets?
p
MCxm = w(x) + x dw/dx
MPi( xi )
MR( y )
MPi( xi )
wi
x*m
i
5
Input
Output
Market structure
market
market
Price taker Price taker Per

$/output unit
E.g. if p(y) = a - by then
R(y) = p(y)y = ay - by2
and so
MR(y) = a - 2by < a - by = p(y) for y > 0.
Suppose that the monopolist seeks
to maximize its economic profit,
a
a
a
What output level y* maximizes
profit?
p(y) = a - by
p(y) = a - by

Firm 1s Supply
p
Firm 2s Supply
The Market
p
Short-run industry
supply
p
ps
S1(p)
S1(p)
p
p
A Typical Firm
p
Mkt. Demand
S2(p)
MC(y) AC(y)
Mkt.
Supply
e
S2(p)
Market demand
p
Y se
S1(p)
S(p) = S1(p) + S2(p)
Industrys Supply
Firm 1s Supply
p
p
How are the

F is the total cost to a firm of its shortrun fixed inputs. F, the firms fixed
cost, does not vary with the firms
output level.
cv(y) is the total cost to a firm of its
variable inputs when producing y
output units. cv(y) is the firms variable
cost functi

$/output unit
If the firm sets its own price above the
market price then the quantity
demanded from the firm is zero.
If the firm sets its own price below the
market price then the quantity
demanded from the firm is the entire
market quantity-demanded.
Do

Name:
Student number:
Class:
MBJZ03 Intermediate Econometrics I
Quiz 2
Q1: Can we estimate the following model by using OLS? Why?
= + +
Q2: Consider the linear regression model given by
y = 0 + 1 +
and suppose you are given the following data:
y
x
2
4