Exercise Set 4
1) Question 12.1: Suppose there are 100 identical firms in a perfectly competitive industry. Each firm
has a short-run total cost function of the form
C(q)=(1/300)q3+0.2q2+4q+10
a. Calculate the firms short-run supply curve with q as a func

Exercise Set 5
Chp7 7.1: George is seen to place an even-money $100,000 bet on the Bulls to win the NBA finals. If
George has a logarithmic utility of wealth function and if his current wealth is $1,000,000, what must he
believe is the minimum probability

ECON207 Exercise Set2
1) Consider the utility function u(x1, x2) = (x1-2)(x2-3) with accompanying budget constraint p1x1
+ p2x2 = I.
a) Write down the indifference curve for this utility function.
b) Form the associated Lagrange function and find the asso

Exercise Set (covers the relevant parts of chapters 3,4,5,6,9)
1) Deniz faces a choice set X = cfw_A, B, C, D. Her preferences are defined by A
Are these preferences complete? Are these preferences transitive?
B, B
D, B
C, D
A.
2) Meryem faces a choice se

Hicksian vs Slutsky
Assume a person has a utility function U = XY, and money income of $10,000, facing an initial price of X
of $10 and price of Y of $15. If the price of X increases to $15, answer the following questions:
(a) What was the initial utility

ECON207 Quiz3
(Bring in class on March 25, 2015)
1) (30 points) Assume a person has a utility function U = XY, and money income of $15,000, facing an
initial price of X of $10 and price of Y of $15. If the price of Y decreases to $10, answer the following

ECON207
EXERCISE SET 1 with Solutions
1) Which of these utility functions represent the same preferences as U ( x, y)
a.
b.
c.
d.
xy ?
U ( x, y) 10 xy
U ( x, y) xy
U ( x, y) ln x ln y
All of the above represent the same preferences. (Hint: calculate MRS

Exercise Set 3
1) A firm has production function f(k,l) = l0.5 (k 1)0.5. The prices of the inputs are v and w respectively.
a) Find MPk, MPl and RTS.
b) If k is fixed at 5, what is the short-run total cost function, short-run marginal cost function and
sh

Exercise Set 2 (Econ 207-Kemal YILDIZ)
1 Consider your preferences for five dollar bills and ten dollar bills (and suppose
that you could have partial 10 and 5 bills).
A: Suppose that all you care about is how much money you have, but you dont
care whethe