ECO204: Solutions to Worksheet 18
1. Consider two firms facing the demand curve P = 50 5Q, where Q = q1 + q2. The firms cost
functions are C1(q1) = 20 + 10q1 and C2(q2) = 10 + 12q2.
a. Suppose both firms have entered the industry. What is the joint profit
ECO204: Solutions to Worksheet 14
1. Suppose that an industry is characterized as follows:
each firms total cost function
C = 100 + 2q2
P = 90 2Q
industry demand curve
a. If there is only one firm in the industry, find the monopoly price, quantity, and le
ECO204: Tutorial Worksheet 7
1. (Member 3) A moderately risk-averse investor has 50 percent of her portfolio invested in
stocks and 50 percent in risk-free Treasury bills. Show how each of the following events
will affect the investors budget line and the
Tutorial 4: Deriving demand decomposition
ECO 204 Y
1) The representative consumer in a society derives the following utility from the consumption of two
goods X and Y: U = X1/4 Y 3/4. He has an income of $120 to spend on those goods. Assume that the pric
ECO 204Y, Microeconomics for Commerce Students
Department of Economics, University of Toronto, Mississauga
MAKEUP EXAM
April 6, 2015
Duration: 75 minutes
Total Worth: 60 marks, All questions equally weighted
INSTRUCTIONS: Answer ALL four questions below.
1
Tutorial 3: ECO 204Y (2015-2016)
1. Ms. Caffeine enjoys coffee (C ) and tea (T) and where the marginal utility from enjoying a
cup of coffee is 3 while tea is 4 for all amounts of tea or coffee. If coffee and tea cost $3 each
and Ms. Caffeine has $12 to
ECO204: Solutions to Worksheet 19
1. Suppose that the wage rate is $16 per hour and the price of the product is $2. Values for
output and labor are in units per hour.
a. Find the profit-maximizing quantity of labor.
From the information given above, calcu
Janice Chan, Zhiqing Huang, Yiling Jiang, Qianying Qin, Mevan Srishanmugathasan
Introduction
Dell is famous for producing, designing and selling personal and official computers. It
is also well known by its excellent Direct Model. In this case study, task
ECO344H5: Labour Economics and Market Frictions
Th, 1:10am-3:00pm, DH 2060
Winter term, 2016
Instructor: Laura Turner
Email: lmf.turner@utoronto.ca
Office hours: 3:15-5:30pm, Th, Rm. 3262 Innovation Complex
(Office hours will be moved to Monday at the sam
Solutions to Mid-term 1
ECO 204Y
1. Denise is shopping for lobsters and eclairs. When she faces budget line b1, she chooses
market basket A over market basket B. When she faces budget line b2, she chooses basket B
over basket C. Which assumption of consum
ECO2
204: Solution to Tutoria Worksheet 2
ns
al
t
1. Anne has a job th requires her to travel three out of every four w
e
hat
h
f
weeks. She h an annua
has
al
travel budget and can travel either by trai or by plan The airlin on which she typically
d
e
in
ECO204: Tutorial Worksheet 6
1. (Member 2) Suppose that Natashas utility function is given by u ( I ) 10 I , where I
represents annual income in thousands of dollars.
a. Is Natasha risk-loving, risk neutral or risk averse? Explain.
b. Suppose that Natasha
ECO204: Tutorial Worksheet 7
1. Fill in the blanks in the table provided on the next page.
2. Suppose the economy takes a downturn, and that labor costs fall by 50% and are expected
to stay at that level for a long time. Show graphically how this change i
ECO204: Tutorial Worksheet 21
3
1
1. (Member 1) Suppose Edwards utility function can be described by U 25 I 5 R 5 . Derive the
number of hours he will work when the wage is $15. Supposing his wage increased to $35,
will the substitution or income effect d
ECO204: Tutorial Worksheet 22
1. (Member 1, 2 and 5) Two used car dealerships compete side by side on a main road. The
first, Harrys Cars, always sells high-quality cars that it carefully inspects and, if
necessary, services. On average, it costs Harrys $
ECO204: Tutorial Worksheet 3
*Each member of the group has been assigned a problem below. You are responsible for learning
how to solve the problem and teaching the rest of your group. If you dont have a 5th member in
your group (most groups wont), thats
ECO204: Solutions to Worksheet 21
3 1
5R5
25 I
1. max U
subject to I = wH and H = 24 R
First, combine the constraints: I = w(24 R) = 24w wR
3
1
U 25(24w wR) 5 R 5
1
FOC :
4
3
2
U
3
1
0 25 24w wR 5 wR 5 25(24w wR) 5 R 5
R
5
5
4
3
1
3
4
1
2
2
1
3
25(24w w
EC
CO204: Solu
utions to Wo
orksheet 20
1. Monopsony
M
To maximize rent, the union will choose the num
T
mber of labor
r-days so tha the margin
at
nal
re
evenue of the last day of labor sold (the additio
f
onal wages e
earned) is eq to the ex
qual
xtra
co
ECO204: Tutorial Worksheet 4
1. (Member 5) The director of a theatre company in a small college town is considering
changing the way he prices tickets. He has hired an economic consulting firm to estimate
the demand for his tickets. The firm has classifie
ECO204: Solutions to Worksheet 22
1. Two used car dealerships compete side by side on a main road. The first, Harrys Cars,
always sells high-quality cars that it carefully inspects and, if necessary, services. On
average, it costs Harrys $8000 to buy and
EC
CO204: Solu
utions to Wo
orksheet 5
1. The lost consu
T
umer surplus is area B + C in the graph a
i
above. Thus, the loss in co
onsumer surpl is
lus
(1
16)(7 5) + (1/2)(20 16)(7 5) = $36
6.
2. Consider a lottery with th possible outcomes:
C
hree
e
$12
ECO204: Tutorial Worksheet 5
1. (Member 1) Recall this problem from Worksheet 4: Suppose you are in charge of a toll
bridge that costs essentially nothing to operate. The demand for bridge crossings Q is
given by P = 15 (1/2)Q.
e. Find the lost consumer s
1
Solutions to Tutorial 3: ECO 204Y (2015-2016)
1. Ms. Caffeine enjoys coffee (C ) and tea (T) and where the marginal utility from enjoying a
cup of coffee is 3 while tea is 4 for all amounts of tea or coffee. If coffee and tea cost $3 each
and Ms. Caffei
ECO204: Tutorial Worksheet 3
1. (This problem appeared on Worksheet 2, Question 10(c). I mistakenly included it in last
weeks worksheet, and so Im including it here again as the solutions are more relevant to the
material we covered this week.) Each week,
ECO204: Tutorial Worksheet 6
1. A moderately risk-averse investor has 50 percent of her portfolio invested in stocks and
50 percent in risk-free Treasury bills. Show how each of the following events will affect
the investors budget line and the proportion
ECO204: Tutorial Worksheet 7
1. For each of the following examples, draw a representative isoquant. What can you say
about the marginal rate of technical substitution in each case?
a. A firm can hire only full-time employees to produce its output, or it c
ECO204: Tutorial Worksheet 8
1. A firm has a short-run fixed production cost of $5000 and a constant marginal cost of
production of $500 per unit produced.
a. What is the firms total cost function? Average cost?
b. If the firm wanted to minimize the avera
ECO204: Solutions to Worksheet 6
1. A moderately risk-averse investor has 50 percent of her portfolio invested in stocks and 50 percent in
risk-free Treasury bills. Show how each of the following events will affect the investors budget line
and the propor
ECO204: Tutorial Worksheet 10
1. The data in the table below gives information about the price in dollars for which a firm
can sell a unit of output and the total cost of production.
a. Fill in the blanks in the table.
b. Show what happens to the firms ou
ECO204: Solutions to Worksheet 9
1. A computer companys cost function, which relates its average cost of production (AC) to its
cumulative output in thousands of computers (Q) and its plant size in terms of thousands of
computers produced per year (q) wit