1. A consumer spends his income on 2 commodities, X and Y. When X
costs $2 each and Y costs $10 each, he consumes 30 units of X and 3 units
of Y per month. If the price of X fell to $1.90 each while the price of Y rose
to $11 each, he must be at least as
Consumer Theory: Income Effect and Substitution
Effect
Microeconomic Theory (Econ2101&2210)
Hongsong Zhang
School of Economics and Finance
University of Hong Kong
February 15, 2017
Income Offer Curve
and Price Offer Curve
H.Zhang (HKU-SEF)
Consumer Theory
Econ%2101/2210:%Intermediate%Microeconomics%
Fall%2016%
%
Suggested%Solutions%to%Problem%Set%1%
%
Book Problems
Chapter 3
5. Suppose that Bridget and Erin spend their incomes on two goods, food (F) and clothing (C).
Bridgets preferences are represented by
X
Y
Good Y
Better
Good X
500
3
500
7
Income
Rice
xA
(xA , xB )
(xA , xB )
xB = 4/xA
(xA , xB )
xB = 6/xA
xB = 4/xA
xB
(xA , xB )
(xA , xB )
p
2 F
U (F, C) = C +
Problem set 2
Econ2101/Econ2210, Spring 2017
(Due 12pm, March 7, 2017)
Submission Channels: Paper version encouraged. You may also email to TA
before the deadline.
Format: type-and-print version is encouraged. Handwriting version is acceptable
Part I: Mul
Consumer Theory: Expenditure Minimization
Microeconomic Theory (Econ2101&2210)
Hongsong Zhang
School of Economics and Finance
University of Hong Kong
February 15, 2017
Expenditure Minimization
Two sides of the same coin:
Utility Maximization:
Given your e
Producer Theory: Profit Maximization
and Cost Minimization
Microeconomic Theory (Econ2101/2210)
Hongsong Zhang
School of Economics and Finance
University of Hong Kong
March 1, 2017
Firms Objective: Type I
Competitive Market Assumption: the firm faces fixe
Producer Theory: Technology and Its Representation
Microeconomic Theory (Econ2101/2210)
Hongsong Zhang
School of Economics and Finance
University of Hong Kong
February 22, 2017
Outline
Technology and Its Representation
Profit Maximization and Profit Funct
Equilibrium with Market Power: Monopoly
Microeconomic Theory (Econ2021&2210)
Hongsong Zhang
School of Economics and Finance
University of Hong Kong
April 5, 2017
Review: Assumptions in Competitive Equilibrium
Key assumptions for Competitive Equilibrium
1
Competitive Market: Partial Equilibrium
Microeconomic Theory (Econ2021&2210)
Hongsong Zhang
School of Economics and Finance
University of Hong Kong
March 22, 2017
Review
Consumer Theory: given output price p (and income), consumers choose
consumption bund
Answer to second tutorial, slide 39:
What if the utility function is (, ) = cfw_, , facing the same constraint as
above?
Utility maximizing condition is 1y = 2x.
What if the utility function is (, ) = cfw_, , facing the same constraint as
above?
Utility m
Competitive Market: General Equilibrium
Microeconomic Theory (Econ2021&2210)
Hongsong Zhang
School of Economics and Finance
University of Hong Kong
March 30, 2017
Review: Partial Equilibrium
In partial equilibrium, we consider
One good.
Many producers pro
Competitive Market: Welfare Analysis
Microeconomic Theory (Econ2021&2210)
Hongsong Zhang
School of Economics and Finance
University of Hong Kong
March 22, 2017
Review: Market Equilibrium
P
Individual consumer optimization: X (p) =P i xi (p)
Individual pro
Solution to Problem Set 3: Econ2101 & 2210
Spring, 2017
Deadline: Before class (1:30pm) on April 20th, 2017.
Submission Channels: Paper version encouraged, or email to TA before deadline.
Format: type-and-print version is encouraged. Handwriting version i
Solution to Problem Set 4: Econ2101 & 2210
Spring, 2017
Deadline:
Submission Channels: Paper version encouraged. You may also email to TA before
the deadline.
Format: type-and-print version is encouraged. Handwriting version is acceptable.
Remark 1 This p
Problem Set 2: Econ2101 & 2210
Spring, 2017
Deadline: .
Submission Channels: Paper version encouraged. You may also email to TA before the deadline.
Format: type-and-print version is encouraged. Handwriting version is acceptable.
Remark 1 This problem set
Problem set 2
Econ2101/Econ2210, Spring 2016
Dr. Bei Qin, HKU
(Due 1pm, April 13, 2016)
Submission Channels: Paper version encouraged. You may also email to TA before the deadline.
Format: type-and-print version is encouraged. Handwriting version is accep
Econ 2101/2210: Intermediate Microeconomics
Fall 2016
Problem Set 1
Due September 30, 2016. Late problem sets will be graded according to the assignment policy announced on the course syllabus. Students are encouraged to work in groups. However,
each stud
1.
P&R Chapter 11 - Exercises 4.
a.
With separate markets, BMW chooses the appropriate levels of QE and QU to
maximize profits, where profits are:
TR TC QE PE QU PU QE QU 20,000 10,000,000,000.
Solve for PE and PU using the demand equations, and substitu
P&R Chapter 11
4. Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to
$20,000 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices
and quantities BMW should set for sales in Europe and in th
ECON2101_2210
1st tutorial Indifference Curve Analysis
Preference
Three basic assumptions about preferences
Completeness
Transitivity
More is preferred
Preference
Completeness: Preferences are assumed to be
complete. In other words, consumers can com
Solution to Problem Set 1: Econ2101 & 2210
Spring, 2017
Deadline:
Submission Channels: Paper version encouraged. You may also email to TA before the deadline.
Format: type-and-print version is encouraged. Handwriting version is acceptable.
Remark 1 This p
Problem Set 2: Econ2101 & 2210
Spring, 2017
Deadline: 5pm, March 10th, 2017. (I will post the solution online after the deadline. So please
submit it in time.)
Submission Channels: Paper version encouraged. You may also email to TA before the deadline.
Fo
In this exercise, do not round up your answer to integer, just correct to 2 decimal places
1. The following function represents a typical consumers preference
(, ) = 2( 0.5 + 0.5 )
Average consumer has an income level of $18 per period, the prices of Good
Solving the production optimization, long run and short run cost functions.
Suppose = . . .
To determine the optimal amount of labour and capital:
= + . . = . . .
= ( + ) + [ . . . ]
= . . = =
= . . = =
= . . . =
From the first two results:
. .
=
1. Suppose the input prices are w = 4 and r = 9, q =
4 0.5 0.5 and the fixed cost is 10. Capital is the fixed
factor in the short run.
(a) What are the marginal product of labour and capital?
(b) What is the firms marginal rate of technical
substitution?
The University of Hong Kong
School of Economics
and Finance
TECHNOLOGY
FOREIGN TRADE AND INVESTMENT IN CHINA
Spring Semester 2017
[ECON0602/ECON2249]
General Information
Instructor:
Tel:
Email:
Office Hours:
Class Time and Venue:
Pre-requisite
Teaching As
ECON2101/ECON2210 Microeconomic Theory
Note on Production Function
Assume that a firm has the following production function:
, =
where and are non negative constant.
From a production function, we can obtain different information about
this firm:
(a) Th
Producer Theory: Profit Maximization
and Cost Minimization
Microeconomic Theory (Econ2101/2210)
Hongsong Zhang
School of Economics and Finance
University of Hong Kong
March 1, 2017
Firms Objective: Type I
Competitive Market Assumption: the firm faces fixe
ECON2101_2210
4th tutorial
Revealed Preference and Production
Revealed Preference
Revealed Preference
If I choose bundle A but not bundle B.
A is revealed preferred to B (to me, A is a better basket
than B).
A is also revealed preferred to all the poin