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Questions and Answers
If A~B, then the individual is indifferent regarding the two consumption bundles A and B.
If A~B, then the individual is indifferent regarding the two consumption bundles A and B.
True (A)
If A~B, then it must also be that U(A) = U(B).
If A~B, then it must also be that U(A) = U(B).
True (A)
The indifference curves of the individual are strictly convex.
The indifference curves of the individual are strictly convex.
True (A)
The preferences of the individual can also be represented by the utility function U(X,Y) = 2XY.
The preferences of the individual can also be represented by the utility function U(X,Y) = 2XY.
Good X and good Y are perfect complements.
Good X and good Y are perfect complements.
The income expansion path is a straight line.
The income expansion path is a straight line.
In the utility maximum the individual obtains the utility U* = 5.
In the utility maximum the individual obtains the utility U* = 5.
If the price of good X doubles, then the total effect of the price change is equal to the income effect of the price change.
If the price of good X doubles, then the total effect of the price change is equal to the income effect of the price change.
The production function has increasing returns to scale.
The production function has increasing returns to scale.
The conditional factor demand for labor is L(Q) = Q.
The conditional factor demand for labor is L(Q) = Q.
The marginal costs of the firm are increasing in Q.
The marginal costs of the firm are increasing in Q.
Suppose the firm has to produce Q = 81. Then the total costs of the firm are TC = 6.
Suppose the firm has to produce Q = 81. Then the total costs of the firm are TC = 6.
At a price P* the profit maximizing firm should leave the market immediately.
At a price P* the profit maximizing firm should leave the market immediately.
The producer surplus of the firm corresponds to the area ABE.
The producer surplus of the firm corresponds to the area ABE.
The average fixed costs of producing Q* correspond to the area ABCD.
The average fixed costs of producing Q* correspond to the area ABCD.
The long-run supply curve of the firm is equal to the marginal cost curve from point F onward.
The long-run supply curve of the firm is equal to the marginal cost curve from point F onward.
The fixed costs of the two firms are equal to zero.
The fixed costs of the two firms are equal to zero.
If the two firms form a collusive monopoly, then the industry profit is π1 + π2 = 202.50.
If the two firms form a collusive monopoly, then the industry profit is π1 + π2 = 202.50.
If the two firms compete in quantity, then the market price in the Cournot-Nash equilibrium is P = 35.
If the two firms compete in quantity, then the market price in the Cournot-Nash equilibrium is P = 35.
If the two firms compete in prices, then the produced industry quantity in the Bertrand-Nash equilibrium is Q = q1 + q2 = 18.
If the two firms compete in prices, then the produced industry quantity in the Bertrand-Nash equilibrium is Q = q1 + q2 = 18.
The individual is risk-loving.
The individual is risk-loving.
The expected utility of the lottery is 90p.
The expected utility of the lottery is 90p.
If p = 1/2, then the utility of the expected payoff is 54.
If p = 1/2, then the utility of the expected payoff is 54.
If p = 1/2, then the certainty equivalent of the lottery is 4√5.
If p = 1/2, then the certainty equivalent of the lottery is 4√5.
If v < p + z(κ; λ), then the consumer always refrains from consuming the product.
If v < p + z(κ; λ), then the consumer always refrains from consuming the product.
For z(κ; λ) = κλ, the conditional indirect utility u(κ,p; λ) with consumption decreases with an increase in the intensity of climate concerns λ, all other things being equal.
For z(κ; λ) = κλ, the conditional indirect utility u(κ,p; λ) with consumption decreases with an increase in the intensity of climate concerns λ, all other things being equal.
The greater the 'loss' E from the climate externality caused by other consumers, the more consumers refrain from consuming the product.
The greater the 'loss' E from the climate externality caused by other consumers, the more consumers refrain from consuming the product.
Stronger climate concerns λ always lead to a higher profit maximizing price p of the product if the supplier's marginal cost с(κ) decrease with an increasing product carbon footprint κ.
Stronger climate concerns λ always lead to a higher profit maximizing price p of the product if the supplier's marginal cost с(κ) decrease with an increasing product carbon footprint κ.
Determine the number of subgames in the sequential game.
Determine the number of subgames in the sequential game.
How many pure-strategy combinations survive the iterated elimination of strictly dominated strategies (IESDS) for x = 5?
How many pure-strategy combinations survive the iterated elimination of strictly dominated strategies (IESDS) for x = 5?
For which values of x does the game have exactly one Nash equilibrium in pure strategies?
For which values of x does the game have exactly one Nash equilibrium in pure strategies?
For x = 0, determine the probability p with which player 1 plays the pure strategy L in the unique Nash equilibrium in mixed strategies.
For x = 0, determine the probability p with which player 1 plays the pure strategy L in the unique Nash equilibrium in mixed strategies.
Calculate the offer curve of individual A.
Calculate the offer curve of individual A.
Flashcards
Indifference
Indifference
A preference relation where the consumer is indifferent between two bundles, meaning they provide the same level of satisfaction.
Increasing Returns to Scale (Production Function)
Increasing Returns to Scale (Production Function)
A utility function exhibits increasing returns to scale if doubling all inputs more than doubles the output.
Conditional Factor Demand for Labor
Conditional Factor Demand for Labor
The amount of labor a firm uses to produce a specific quantity of output, given the prices of labor and capital.
Marginal Costs (Firm)
Marginal Costs (Firm)
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Exit the Market (Firm)
Exit the Market (Firm)
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Producer Surplus (Firm)
Producer Surplus (Firm)
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Average Fixed Costs (Firm)
Average Fixed Costs (Firm)
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Long-Run Supply Curve (Firm)
Long-Run Supply Curve (Firm)
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Fixed Costs (Firm)
Fixed Costs (Firm)
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Market Price (Firm)
Market Price (Firm)
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Profit Maximization (Firm)
Profit Maximization (Firm)
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Quantity (Firm)
Quantity (Firm)
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Marginal Revenue (Firm)
Marginal Revenue (Firm)
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Marginal Costs (Firm)
Marginal Costs (Firm)
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Total Costs (Firm)
Total Costs (Firm)
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Collusive Monopoly
Collusive Monopoly
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Cournot-Nash Equilibrium
Cournot-Nash Equilibrium
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Bertrand-Nash Equilibrium
Bertrand-Nash Equilibrium
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Expected Utility
Expected Utility
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Risk-Loving
Risk-Loving
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Certainty Equivalent
Certainty Equivalent
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Risk Premium
Risk Premium
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Quantity Demanded (Individual)
Quantity Demanded (Individual)
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Individual Demand Curve
Individual Demand Curve
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Market Demand
Market Demand
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Market Demand Curve
Market Demand Curve
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Market Equilibrium
Market Equilibrium
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Walrasian Equilibrium
Walrasian Equilibrium
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Price Ratio
Price Ratio
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Free Trade
Free Trade
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Pareto Improvement
Pareto Improvement
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Rational Choice Theory
Rational Choice Theory
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Study Notes
Microeconomics II Exam - Part 1
- Problem 1: Consumer Behavior (6 points)
- (a): If consumption bundle A is preferred to bundle B (A ≻ B), then the individual is indifferent regarding the two bundles.
- (b): If bundle A is indifferent to bundle B (A ~ B), then the utility derived from bundle A is equal to the utility derived from bundle B (U(A) = U(B)).
- (c): Indifference curves are strictly convex for utility functions of the form U(X,Y) = XY.
- (d): The utility function U(X,Y) = 2XY represents the same preferences as U(X,Y) = XY.
Problem 2: Individual and Market Demand (6 points)
- (a): Good X and good Y are perfect complements when the utility function contains a mathematical maximum expression (e.g., U(X,Y) = max{2X, Y}).
- (b): The income expansion path is a straight line for goods that are perfect complements.
- (c): The maximum utility achievable, U*, is 5 when the given constrained utility function and prices are used.
- (d): When the price of good X doubles, the total effect of the price change equals the income effect.
Problem 3: Production and Cost (8 points)
- (a): The production function Q(K,L) = 16K2L2 exhibits increasing returns to scale.
- (b): The conditional labor factor demand function is L(Q) = Q.
- (c): The marginal cost of production increases with output Q.
- (d): The total cost for a production level Q = 81, given the provided parameters, is TC = 6.
Problem 4: Perfect Competition and Monopoly (8 points)
- (a): At a market price equal to the average total cost (P* = ATC), the profit-maximizing firm will exit the market immediately.
- (b): The producer surplus corresponds to the area ABE in the presented graph.
- (c): The average fixed costs (AFC) at a particular output level Q* correspond to the area ABCD in the graph.
- (d): The long-run supply curve of a firm in a perfectly competitive market is equal to the marginal cost curve above the minimum average variable cost curve (AVC).
Problem 5: Imperfect Competition (8 points)
- (a): The given cost structures imply that fixed costs are zero for the two firms in the market.
- (b): The total profit of the two firms combined in a collusive monopoly scenario is 202.50.
- (c): The market price in the Cournot-Nash equilibrium, given the specific values and conditions, results in a P = 35.
- (d) The statements relating to different pricing and production strategies under various competition models are not included
Problem 6: Investment, Time, and Insurance (8 points)
- (a): The given utility function (U(x) = x^2 - 10) represents risk-loving behavior.
- (b): The expected utility of the lottery, with p equals 1 / 2 can be expressed as 90 * p .
- (c): The utility of the expected payoff (when p= 0.5) is 54.
- (d): The certainty equivalent of the lottery, when p = 0.5, is 4√5.
Problem 7: Monopoly and Climate Protection (6 points)
-
(a): If the utility (v) is less than the price plus the “loss” from consumption (p + z(к; λ)), the consumer will avoid purchasing the product.
-
(b): Conditional indirect utility (with function z(κ; λ) = κλ), decreases with higher values of the intensity of climate concerns (λ), all other things remaining the same.
-
(c): Greater climate concern leads to greater reduction in consumption due to the “loss” (E) that arises when others are also contributing to climate externalities.
-
(d): If the marginal cost (с(к)) decreases with higher values of product carbon footprint (к), then stronger climate concern leads to higher profit maximizing prices.
Problem 1: Game Theory (20 points)
- (a): The number of subgames in the provided sequential game is 3.
- (b): For x=5, the number of pure strategy combinations that survive the iterative elimination of strictly dominated strategies is 4.
- (c): The game has exactly one Nash equilibrium in pure strategies when x is between 1 and 3.
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Description
Test your understanding of consumer behavior and demand in microeconomics with this exam. It covers concepts like utility functions, indifference curves, and the characteristics of perfect complements. Prepare to demonstrate your grasp of these fundamental principles in microeconomic theory.
