+61-413 786 465

info@mywordsolution.com

## Economics

 Basic Economics Macroeconomics Microeconomics Business Economics Econometrics International Economics Managerial Economics Game Theory Public Economics

GROUP A
problem1)

An agent has a utility function over goods 1 and 2 of the form U= X1c X2d, where c is your individual number and d is your minimum number. The agent’s income is equal to your 2-digit number. The price of good 1 is your maximum number and the price of good 2 is your median number. Derive the agent’s demand functions for good 1 and good 2. find out the quantities of good 1 and good 2 in the agent’s optimum bundle.

problem2)

An agent has a utility function over goods 1 and 2 of the form U= X1c X2d, where c is your 1- digit number and d is your minimum number. The agent’s income is equal to your 2-digit number. Initially, the price of good 1 is your median number and the price of good 2 is your individual number.
Let the price of good 1 change to your maximum number. For good 1, determine for this price change the
a) total price effect
b) the substitution effect
c) the income effect

problem 3)

For the same problem you analysed in problem 2, find for that price change the
a) Laspeyres measure of the welfare change
b) Paasche measure of the welfare change
c) compensating variation
d) equivalent variation

GROUP B

problem 4)

a) Consider the problem you analysed in problem 2. Instead of the income value you used there, allow the agent to have an endowment of good 1 equal to the first digit of your 2- digit number, and an endowment of good 2 equal to the second digit of your 2-digit number. Derive expressions for the ordinary demands for both goods and find out the gross and net demands for each good.

b) An agent has a utility function over wealth given by U= W.5/c where c is your 1-digit number. Their wealth if not robbed is equal to your 2-digit number multiplied by 1000. Should they be robbed, their wealth will be your maximum number multiplied by 1000. They assess the probability of being robbed as 1/(median number x 10). How much would this agent be prepared to pay for full insurance? How much would they have to pay for full (actuarially) fair insurance?

problem 5)

Consider the two agents, A and B.

• Agent A has the utility function UA= X1c X2d where c is your minimum number and d is your median number. A’s endowment of good 1 is the first digit of your 2-digit number, and A’s endowment of good 2 is the second digit of your 2-digit number.
• Agent B has the utility function UA= X1c X2d where e is your maximum number and f is your 1-digit number. B’s endowment of good 1 is the second digit of your 2-digit number, and B’s endowment of good 2 is the first digit of your 2-digit number.
• The price of good 2 is your 1-digit number.

a) Find the equilibrium price for good 1 and the gross and net demands of both agents for goods 1 and 2.
b) Repeat the analysis for the cases where

i. the values of c and d are swapped for A, and e and f are swapped for B.
ii. the endowments of goods 1 and 2 are swapped for A, and the endowments of goods 1 and 2 are swapped for B [with c, d, e, f at their original – i.e part a) values].

problem6) Consider the two agents, A and B. Each can choose one of two strategies, 1 and 2. The payoffs for the various outcomes are illustrated below (A’s payoffs listed first in each cell):
Player B
Strategy 1            Strategy 2

Player A            Strategy 1            3.5, b                   c, 2.5

Strategy 2             e, f                      g, 1.5

where:
• b is your individual number
• c is your 1-digit number
• e is your median number
• f is the first digit of your 2-digit number
• g is the second digit of your 2-digit number

a) Assume that A and B act simultaneously. Find all equilibrium strategy combinations of this game, including, where appropriate, mixed-strategy equilibria. Show A and B’s equilibrium payoffs.
b) Reprepare this game in extensive form. Determine the equilibria and payoffs for the case in which A moves first, and the case in which B moves first.

GROUP C

problem7)

Consider a market in which all output is produced by two firms, A and B. The market inverse demand curve is given by P= a-bQ where a is your two-digit number x 10 and b is your individual number. Both firms have a constant marginal cost equal to your median number.
a) Find the Cournot equilibrium outputs for firms A and B, the equilibrium market price and the equilibrium profit for each firm.
b) Repeat for
i. the case where the marginal cost of firm B is constant and equal to your maximum number.
ii. The case where there are n firms with marginal cost equal to your median number. Find the output of each firm, the market price and each firm’s profit, where n is the sum of your individual number and your median number. [Hint: with identical costs each firm’s output will be the same].
iii. The case where there are two firms A and B and the marginal cost for firm A is mAQA (where mA is your minimum number) and the marginal cost for firm B is mBQB (where mB is your 1-digit number).

problem8). Consider a market in which all output is produced by two firms, A and B. The market inverse demand curve is given by P= a-bQ where a is your two-digit number x 10 and b is your individual number. Both firms have a constant marginal cost equal to your median number.
a) Find the Stackelberg equilibrium outputs for firms A and B, the equilibrium market price and the equilibrium profit for each firm, on the assumption that firm A is the leader and firm B is the follower.
b) Repeat for
i. the case where the marginal cost of firm B is constant and equal to your maximum number.
ii. The case where there are two firms A and B and the marginal cost for firm A is mAQA (where mA is your minimum number) and the marginal cost for firm B is mBQB (where mB is your 1-digit number).
iii. The above two cases on the assumption that B is the leader and A the follower.
problem9)

Consider a market a market for used cars in which cars can be either high-quality or lowquality. The demand for both types of car is perfectly elastic. The price buyers are willing to pay for a car known to be of low quality is your individual number x \$2000 and the price they are willing to pay for a car known to be of high quality is your maximum number x \$4000. Sellers are willing to accept a price equal to your minimum number x \$1000 for a car known to be of low quality, and to accept a price equal to your median number x \$3750 for a car known to be of high quality. The number of cars available for potential sale is equal to your 2-digit number x 200. The number of high-quality cars in that group is equal to your maximum number x 100. The supply of both cars is perfectly elastic up to the quantity of cars available.

What will be the outcome in the market in terms of the prices and quantities of cars of each type sold, the welfare gains from trade, and how those gains are distributed, is each of the following cases:
a) Information on quality is complete and symmetric.
b) Information on quality is zero and symmetric, and both buyers and sellers have the utility function U=V, where V is wealth.
c) Information on quality is complete for sellers but zero for buyers, and buyers have the utility function U=V.
d) Information on quality is complete for sellers but zero for buyers, and buyers have the utility function U=c ln v, where c is your 1-digit number.
For cases c and d above, find the maximum value of the sellers’ valuation of good-quality cars (given your original value of θ) that would allow a market for good-quality cars to exist. For the original sellers’ valuation of good cars find the minimum value of θ that would allow a market for good-quality cars to exist.

If the sellers of good quality cars in cases c and d were able to spend \$18000 on a certification process that buyers regarded as 100% credible, would they do so? If not, what would be the maximum amount they would be willing to pay?

problem10) Consider a good for which production generates external costs. Let the marginal external cost function be MEC=aE, where a is your 1-digit number, and E the quantity of emissions. The pollution can be abated at a cost. Let the marginal cost of abatement function be MCA=B-cE, where B is your 2-digit number and c is your median number.
a) Find the socially optimal level of emissions, and the optimal value of abatement costs and external cots.
b) If an emission fee were levied on producers, what would be the deadweight social loss associated with setting the fee at 90% of the correct value?
c) If an emission standard were enforced, what would be the deadweight social loss associated with setting the standard at 110% of the correct value?

Microeconomics, Economics

• Category:- Microeconomics
• Reference No.:- M9457

Have any Question?

## Related Questions in Microeconomics

### Question is the demand curve for children downward sloping

Question: Is the demand curve for children downward sloping? Explain, being careful to specify exactly what you mean by the price of children. What is your evidence? How about the demand for high grades in this course? D ...

### Question during 2002 the federal funds rate remained more

Question: During 2002, the Federal funds rate remained more than 1% below the rate of inflation. When that happened in 1972 and 1975, the next two business cycle peaks ended in double-digit inflation, although admittedly ...

### Question soapy inc and suddies inc are the only producers

Question: Soapy Inc. and Suddies Inc. are the only producers of soap powder. They collude and agree to share the market equally. If neither firm cheats on the agreement, each makes \$1 million profit. If either firm cheat ...

### Question at the wto ministerial conference held in seattle

Question: At the WTO Ministerial Conference held in Seattle in December of 1999, protesters campaigning for many causes took to the streets and eventually faced tear gas and rubber bullets from the police. Read the WTO P ...

### Question many critics of government programs to help low

Question: Many critics of government programs to help low income individuals argue that these programs create a poverty trap. Explain how programs such as TANF, EITC, SNAP, and Medicaid will affect low-income individuals ...

### Question the cost of maintaining a new care is estimated at

Question: The cost of maintaining a new care is estimated at \$295 the first year and to increase by \$50 each year thereafter. How much should be set aside for maintenance, if the car is to be kept 10 years and if the mon ...

### Question use the islm diagram to show what would happen to

Question: Use the IS/LM diagram to show what would happen to real output and interest rates when the following policy changes are implemented. In this problem, assume that prices remain constant. (A) The Fed hires a heli ...

### Question what economic factors would affect a firms desire

Question: What economic factors would affect a firm's desire to enter and exit a market? What are the market signals that would tell a firm that it is profitable to enter or exit? If possible, use a real-world example fr ...

### Question assume that the demand curve dp given below is the

Question: Assume that the demand curve D(p) given below is the market demand for apples: Q = D(p) = 280 -13p Q = D(p) = 280 -13p, p > 0 Let the market supply of apples be given by: Q = S(p) = 44 + 5p Q= S(p) = 44 + 5p, p ...

### Question select a developed country that has implemented a

Question: Select a developed country that has implemented a tariff and a developing country that manufactures products that are affected by that same tariff. Investigate the impact of the trade barrier on the developing ...

• 13,132 Experts

## Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

### Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

### Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

### Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of \$ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

### Compute the present value of an 1150 payment made in ten

Compute the present value of an \$1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

### Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of \$ 699 per year for 19 years, given a discount rate of 6 percent per annum. As