Search & Filtering
Part II: Choose the best answer for the following statements
1. As per Ordinalists, it is assumed that
A. Utility is not measurable B. Constant marginal utility of money
D. All C. Diminishing marginal
E. A and C
2. Which one of the following is False?
A. The demand will be more elastic if there are close substitutes for it.
B. Necessities are more price elastic than luxuries
C. Demand is more elastic in the long run.
D. None
3. At zero unit of out put
A. Total cost is equal to fixed cost
B. Total variable cost is greeter than fixed cost.
C. Fixed cost is equal to zero
D. Variable cost is equal to total cost
4. In imperfect competition
A. Demand curve is elastic
B. Average revenue is negatively sloped
C. There are many sellers
D. Demand curve is up ward sloping
5.Total utility minus total amount of money spent.
A. Consumer deficit B. Consumer surplus
C. Producer surplus D. Producer deficit
Part 1: Write true or false for the following statements on the separate answer sheet provided.
1. In cardinal utility theory it is assumed that money has constant marginal utility.
2. Indifference curves slopes down ward from right to left.
3. If the quantity demanded does not show any Change as price changes, then
elasticity is zero.
4. The equality of MC and MR determines the equilibrium position of the firm
under all market situations.
5. In a perfectly competitive market structure the marginal cost curve is also its
supply curve.
What does the invisible hand of the market place do?
What is the opportunity cost of doing a bachelor degree in business in a university?
Explain no more than 50 words.
Given U(x, y)=10x0.6y0.4 a) Marginal utility of the two commodities when x-2 and y= 3 (1 points). b) Find Marginal Rate of Substitution when x-y-2 (0.5 points).
Kristen and Anna live in the beach town of Santa Monica.
They own a small business in which they make wristbands
and pot holders and sell them to people on the beach. As
shown in the table on the following page, Kristen can make
15 wristbands per hour but only 3 pot holders. Anna is a bit
slower and can make only 12 wristbands or 2 pot holders in
an hour.
What are the short run and long run production functions for Dell laptops?
Q. 6. Explain each of the following statements using supply-and-demand diagrams. [only graph]
a. “When a cold snap hits Florida, the price of orange juice rises in supermarkets throughout the country.”
b. “When the weather turns warm in New England every summer, the price of hotel rooms in Caribbean resorts drop.”
c. “When a war breaks out in the Middle East, the price of gasoline rises and the price of a used Cadillac falls.”
Q. 7. Over the past 30 years, technological advances have reduced the cost of computer chips. How do you think this has affected the market for computers? For computer software? For typewriters? [only graph]
Q. 8. Using supply-and-demand diagrams, show the effect of the following events on the market for sweatshirts. [Explain step by step like we did in the class]
a. A hurricane in South Carolina damages the cotton crop.
b. All colleges require morning exercise in appropriate attire.
c. Both ‘a’ and ‘b’ occur together and the effect of ‘a’ is greater than the effect of ‘b’
Q. 1. What is law of demand? Explain why there exists a negative relationship between the price of a product and its quantity demanded? Note: discuss the three reasons why the law holds. (Income, substitution effects and law of diminishing marginal utility)
Q. 2. Discuss the determinants of Demand in details with examples.
Q. 3. Popeye’s income declines, and as a result, he buys more spinach. Is spinach an inferior or a normal good? What happens to Popeye’s demand curve for spinach?
Q. 4. What are the supply schedule and the supply curve, and how are they related? Why does the supply curve slope upward?
Q. 5. Does a change in producers’ technology lead to a movement along the supply curve or a shift in the supply curve? Does a change in price lead to a movement along the supply curve or a shift in the supply curve?
1) Consider technology adoption decisions of two firms. Firm A has two possible types, either high or low costs, with associated probabilities 2/3 and 1/3. Firm A observes its own type, but firm B cannot observe it. Graphically, firm A knows which payoff matrix firms are playing, while firm B can only assign a probability 2/3 or1/3 to playing the left-hand (right- hand) matrix.
Figure: technology adoption
a) Identify the strategy space of each firm?
b) Construct the Bayesian normal-form representation of the incomplete information game and determine the Bayesian Nash equilibrium?
