Ask Microeconomics Expert

MICROECONOMIC ANALYSIS:

Section A:

problem 1: What do you mean by a social welfare function? If you suppose that such a function exists, what properties of social optima would be considered by you? Discuss these properties.

problem 2: Assume that there is a pure exchange economy with 2 consumers and 2 goods. The endowments are w1 = (2, 4), w2 = (4, 3). Consumers are or else identical and they have utility function U(x, y) = x1/3y1/3.

a) Make an Edge worth Box for this economy.

b) Give a definition of Pareto Optimal Allocation in this economy. Find out all Pareto optimal allocations and graph them in the Edge worth Box.

c) How would you define a competitive equilibrium for this economy? Solve for the equilibrium and check whether the competitive equilibrium is Pareto Optimal.

problem 3: Two players first simultaneously declare Yes or No. If any of the players declares No, then each player gets 80. If both players declare yes, then they play the given game:

595_subgame perfect equillibria.jpg

Find out all the subgame-perfect equilibria of the whole game including pure strategies only.

problem 4: What is the theory of Second Best? Prove the theorem by using a diagram.

problem 5: Let the optimal incentive plan be given as:

s (x) = wx+ k where
s(x)= incentive scheme
x = output, w = wage and k = constant 4

A worker can produce x units of output at a cost of C (x) = x2/2 and he can achieve a utility level of u = 0 working elsewhere. What is the optimal wage-labor incentive scheme s(x)1 for this worker?

Section B:

problem 6: Suppose Kareena’s utility function is u = (y/1000)1/2. Her initial income when healthy is 36,000. Though, there is a 50% chance that she will face financial loss on being taken ill and the income is likely to decrease by 20,000.

a) Find out the expected value of her income.
b) What expected utility she will have given the possible state of her health?
c) What is the risk premium she will be willing to pay to cover the risk of sickness?

problem 7: Consider the given game given in extensive form:

2408_game in extensive form.jpg

a) Use backwards induction to find out equilibrium of the game.
b) prepare this game in the normal form.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M92046

Have any Question?


Related Questions in Microeconomics

Question show the market for cigarettes in equilibrium

Question: Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the mode ...

Question recycling is a relatively inexpensive solution to

Question: Recycling is a relatively inexpensive solution to much of the environmental contamination from plastics, glass, and other waste materials. Is it a sound policy to make it mandatory for everybody to recycle? The ...

Question consider two ways of protecting elephants from

Question: Consider two ways of protecting elephants from poachers in African countries. In one approach, the government sets up enormous national parks that have sufficient habitat for elephants to thrive and forbids all ...

Question suppose you want to put a dollar value on the

Question: Suppose you want to put a dollar value on the external costs of carbon emissions from a power plant. What information or data would you obtain to measure the external [not social] cost? The response must be typ ...

Question in the tradeoff between economic output and

Question: In the tradeoff between economic output and environmental protection, what do the combinations on the protection possibility curve represent? The response must be typed, single spaced, must be in times new roma ...

Question consider the case of global environmental problems

Question: Consider the case of global environmental problems that spill across international borders as a prisoner's dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries ...

Question consider two approaches to reducing emissions of

Question: Consider two approaches to reducing emissions of CO2 into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermin ...

Question the state of colorado requires oil and gas

Question: The state of Colorado requires oil and gas companies who use fracking techniques to return the land to its original condition after the oil and gas extractions. Table 12.9 shows the total cost and total benefit ...

Question suppose a city releases 16 million gallons of raw

Question: Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table shows the total costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits in ...

Question four firms called elm maple oak and cherry produce

Question: Four firms called Elm, Maple, Oak, and Cherry, produce wooden chairs. However, they also produce a great deal of garbage (a mixture of glue, varnish, sandpaper, and wood scraps). The first row of Table 12.6 sho ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

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.

Ask Now Help with Problems, Get a Best Answer

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