Lecture 19
Neo-Classical Firm
Production Functions
y denotes the output level.
The technologys production function states
the maximum amount of output possible from
an input bundle.
y
f ( x1 ,
, xn )
Production Functions
One input, one output
Output Lev
Lecture 21: Imperfect Competition
Spring 2016
Imperfect Competition
A small number of firms compete in a market
This case is in-between monopoly (single firm) and perfect
competition (many firms).
Imperfect Competition
A small number of firms compete in a
Lecture 18
Sequential Rationality and
Backward Induction
Solving Extensive Form Games
A simple example of dynamic game
Road Map
1. Backward Induction
2. Applications
1. Agenda Setting
2. Pre-trial Negotiations
Definitions
Perfect-Information game is a gam
Lecture 17
Dynamic Games
Introduction
Simultaneous-Move Game:
The Chicken Game
-1,-1
1,0
0,1
1/2,1/2
Normal-form Game: Matching pennies
Head
Tail
Head
-1,1
1,-1
Tail
1,-1
-1,1
Many games are dynamic
Example
1. Players move in sequence.
2. A firm observes
Homework 2
Due March 25th
Problem 1 (modified version of textbook problems 2 and 3 page 261)
Suppose that market demand for golf balls is described by Q=903P, where Q is
measured in kilos of balls. There are two firms that supply the market. Firm 1 can
pr
Homework 1
Due February 15th
Problem 1
The top four diamond miners control 90% of world output. DeBeers produced 50
million carats in 2008. Alrosa produced 36 million carats, Rio Tinto produced 25
million carats and BHP Billiton produced 3.2 million carat
Economics 002
Spring 2016
Constanza Vergara
University of Pennsylvania
Homework 3
Due Tuesday, February 9th
1. Indexation. (30 points)
Recall the table from the previous homework. The following table shows the prices and the
quantities consumed in the cou