5.5 Consider the cost minimization problem for f (z1 , z2 ) = z1 z2 and w = (1, 0). Show that the cost
minimization problem does not have a solution for any q > 0.
Answer: For n > 0, the input z = (q/n, qn) yields output q and its cost is q/n
1.2 On R2 , dene x y if and only if x1 x2 y1 y2 . Show that this relation is both complete and transitive,
hence a preference ordering.
Answer: The relation is complete because if x, y RL , then either x1 x2 y1 y2 (so x
x1 x2 y1 y2 (so y x
3.4 Suppose utility is given by an arbitrary Cobb-Douglas function on R3 . Find the expenditure function
and compensated demands. What theorem tells us that h(p, u) is a function? Determine which goods
are substitutes and which are complemen
2.2 Let utility be u(x) = maxcfw_x1 , 3x2 . Find the Marshallian demand and indirect utility function. For
xed p2 and m, sketch x1 as a function of p1 .
Answer: The utility function is convex, and inspection of the indierence curves shows that
CHAPTER 14 OLIGOPOLY: firms in less competitive markets
14.1 OLIGOPOLY AND BARRIERS TO ENTRY
SHOW HOW BARRIERS TO ENTRY EXPLAIN THE EXISTENCE OF OLIGOPOLIES
If we do not know what an oligopolists demand curve looks like, we also do not know what its
Dr. William Murphy
Intercultural competence is rising as an important competency around the world. It is
the ability to communicate effectively and appropriately with people of other cultures. People
need knowledge, skills
CHAPTER 9 COMPARATIVE ADVANTAGE AND THE GAINS FROM INTERNATIONAL
9.1 THE UNITED STATES IN THE INTERNATIONAL ECONOMY
DISCUSS THE ROLE OF INTERNATIONAL TRADE IN THE U.S. ECONOMY
THE IMPORTANCE OF TRADE TO THE U.S. ECONOMY
GDP is the value of all final
CHAPTER 1 ECONOMICS: FOUNDATIONS AND MODELS
1.1 THREE KEY ECONOMIC IDEAS
Explain these three key economic ideas:
People are rational.
People Use all available information to achieve their goals. Rational individuals weigh the
benefits and costs of each a