Problem Set 5 Solution
ECON201 Element of Economic Analysis II (Honors)
Siying Cao
November 11, 2016
Question 1
(a) See Figure 1 for illustration. Note that the total endowment in this economy is e1 =
e11 + e21 = 4, e2 = e12 + e22 = 4.
Figure 1: Edgeworth
Problem Set 6 Solution
ECON201 Element of Economic Analysis II (Honors)
Siying Cao
December 4, 2016
Question 1
(a) From PS5, we know the core of this economy is
C(E) = cfw_x1 , x2 R2+ |x1 = (a, a), x2 = (4 a, 4 a), 2 a 4 6
which is the line connecting the
ELEMENTS OF ECONOMIC ANALYSIS 2 (H)
ECON 20110 (FALL 2016)
PROBLEM SET 5
DUE ON THURSDAY (11/10) IN CLASS
(1) Consider an exchange economy with two consumers and two goods. Suppose that
consumers share the same utility function u (x1 , x2 ) = x1 x2 and ha
Problem Set 7 Solution
ECON201 Element of Economic Analysis II (Honors)
Siying Cao
December 4, 2016
Question 1
(a) Consider the firms problem
max p(h1 + h2 ) w1 h1 w2 h2
h1 ,h2 0
Restrict the equilibrium to prices that are strictly positive. Normalize p t
ELEMENTS OF ECONOMIC ANALYSIS 2 (H)
ECON 20110 (FALL 2016)
PROBLEM SET 7
DUE ON TUESDAY (11/29) IN CLASS
(1) Consider the Robinson Crusoe model we discussed in class. Now suppose that Mr.
Crusoe is not alone on the island and that, in fact, his wife, Mrs.
ELEMENTS OF ECONOMIC ANALYSIS 2 (H)
ECON 20110 (FALL 2016)
PROBLEM SET 6
DUE ON TUESDAY (11/22) IN CLASS
(1) Consider an exchange economy with two consumers and two goods. Suppose that
consumers share the same utility function ui (x1 , x2 ) xi1 xi2 , i =
Microeconomics
Week 3
Seth Zimmerman
Booth School of Business
University of Chicago
Seth Zimmerman
(Chicago Booth)
Business 33001
1 / 48
Outline for today
Goal: understand how demand curves arise from preferences and
constraints.
What are preferences?
Bud
PROBLEM SET 2
Microeconomics: 33001
Booth School of Business
Professor Seth Zimmerman
1. The rent control agency of Chicago has found that the aggregate demand for apartments,
measured in tens of thousands of apartments, is
QD = 160-8P
Price, which is the
PROBLEM SET 3
Microeconomics: 33001
Booth School of Business
Professor Seth Zimmerman
1. Louis consumes two goods, wine and cheese. In 1994, the price of wine was $4/glass
and the price of cheese was $2/ounce. Louiss income was $60 and he bought 12 glasse
PROBLEM SET 8
Microeconomics: 33001
Booth School of Business
Professor Seth Zimmerman
1. There is a monopoly firm that faces the demand curve: P= 100(1-.01Q) and has a
constant marginal cost of production equal to $20. Find the equilibrium price and outpu
33001 Microeconomics
Autumn 2016
Submitted by:
Sharanya R
33001 Microeconomics
Homework 2
Sharanya R
Problem 1.
(a) Qd = 160-8p and Qs = 70+7p
160-8Pe = 70+7Pe
Pe = $6 (in hundreds); Qe = 112
Price
20
Excess demand (total market)
Drop in quantty supplied
Problem set 8
Microeconomics: 33001
Professor Alex Frankel
1. There are two types of people: tall and short. You are a monopoly retailer of high
end pastas, and you notice that tall people tend to be richer and willing to pay more
for pasta. Right now you
Problem set 1
Microeconomics: 33001
Professor Alex Frankel
1. Suppose worldwide annual supply and demand for wheat are given by the following
equations:
QS = 300P 600
QD = 3600 300P
where P is the price of wheat in dollars per bushel, and Q is the quantit
Problem set 6
Microeconomics: 33001
Professor Alex Frankel
1. The cost function C(Q) of a company producing Q units of output is given by the
following equation:
C(Q) = 100 + 20Q + 10Q2
(a) What are the marginal costs (M C) as a function of Q? Are margina
Problem set 3
Microeconomics: 33001
Professor Alex Frankel
1. Louis has stable preferences (the same every year) and consumes two goods, wine and
cheese. In 1994, the price of wine was $4/glass and the price of cheese was $2/ounce.
Louiss income was $60 a
Problem set 7
Microeconomics: 33001
Professor Alex Frankel
1. Cournot and Stackelberg Competition
Two firms are engaged in Cournot (simultaneous quantity) competition. Market-level
inverse demand is given by
P = 160 4Q
Firm 1 has constant marginal costs o
Problem set 2
Microeconomics: 33001
Professor Alex Frankel
1. The free market outcome is efficient. Explain very briefly (about a paragraph) what
that means, and why this is so.
2. TRUE, FALSE, OR UNCERTAIN (and why):
(a) Booth has decided to raise money
Problem set 5
Microeconomics: 33001
Professor Alex Frankel
1. Restaurants that own their own buildings dont have to pay rent, so they can charge
less for their food. Comment on this statement in the language of economic vs. accounting costs. Would you exp
Microeconomics
Microeconomics: Homework #1
1
HW 1
Microeconomics
HW 1
Problem 1
Solution:
a. The supply demand curve is shown in Figure 1.
Shortage
Figure 1: Supply Demand curve
b. The equilibrium price for wheat is
Pe = 3 and quantity is Qe =2700 .
c. If
Microeconomics
Microeconomics: Homework #3
1
HW 3
Microeconomics
HW 3
Problem 1
Solution:
a. The budget curves for 1994 and 1995 are shown in Figure 1. The two lines intersect at 10 glasses
of wine and 10 oz. of cheese.
Figure 1: Budget curves
b. MRS of w
Microeconomics
Microeconomics: Homework #2
1
HW 2
Microeconomics
HW 2
Problem 1
Solution:
a. The equilibrium price is given by:
1608 Pe =70+ 7 P e
Pe =
90
=6
15
Qe =1608 P e=112
Figure 1 shows the supply demand curve
Figure 1: Apartment supply demand
If t
Microeconomics
Microeconomics: Homework #5
1
HW 5
Microeconomics
HW 5
Problem 1
Solution:
S IT =$ 50,000
Rb=$ 24,000
S own=$ 40,000
Explicit cost of the software business
C explicit =S own + E own+ Cown
$ 65,000
Opportunity cost of starting the new busin
Microeconomics
Microeconomics: Homework #6
1
HW 6
Microeconomics
HW 6
Problem 1
Solution:
Production function
q= KL
Where,
K= number of screw drivers and tiny screws
L= number of workers
Short term
K=100 , wage per employee $ w . The cost function is thu
Session 2: Consumer Theory
Ram Shivakumar
University of Chicago
1
Thinking about choice
The year is 2006
What questions must you
answer as your group
develops the Kindle?
You just started a corner shop
What questions must you
answer?
Decisions
How do peop
Session 3: Production
Ram Shivakumar
University of Chicago
1
Firms
What is a firm?
What does a firm do?
Why do firms exist?
What does it take to start a firm?
What does it take to save a failing firm?
2
US firms [www.bls.gov]
3
New firms- some facts [Shan
Risk & Uncertainty
Ram Shivakumar
University of Chicago
1
Questions
What is risk?
Examples?
Can it be measured?
How is risk distinct from uncertainty?
What should one do when one confronts risk?
Risk
What is risk?
I dont know how to define it but I
Game Theory
Ram Shivakumar
University of Chicago
1
Questions
Describe an important strategic problem/situation you have faced
What makes a problem strategic?
What do you do when you face a strategic problem?
How should one think strategically? That is, wh
Monopoly & Price Discrimination
Ram Shivakumar
University of Chicago
1
Questions
How can you know whether a firm is a monopoly?
What does it take to get a monopoly? Keep it?
Examples of monopolies?
Is a monopoly a good or a bad thing (from a societal view
Oligopoly & Externalities
Ram Shivakumar
University of Chicago
1
Oligopoly
Thus far, we have studied two ends of the spectrum
Perfect competition: many buyers and sellers, homogeneous product, easy entry
and exit, no firms have market power
Monopoly: o
Session 5: Perfect Competition
Ram Shivakumar
University of Chicago
1
Characteristics of perfectly competitive markets
Large numbers of producers and customers
All firms are small relative to the industry; so their production decisions have
no effect on p