economics assignment

Intermediate Microeconomics (Econ 021)

August/6/2020

Quiz 6 (Time Allotted: 35 minutes)

Student Name: ___________________________________ Score:_____/30

Part I: Multiple choice. Answer all questions in this part. (10 marks).

1. Which of the following is not a type of market structure? A. Competitive monopoly B. Oligopoly C. Perfect competition D. All of the above are types of market structures.

2. Which of the following methods of selecting a strategy is consistent with risk averting behavior? A. If two strategies have the same expected profit, select the one with the smaller

standard deviation.

B. If two strategies have the same standard deviation, select the one with the smaller expected profit.

C. Select the strategy with the larger coefficient of variation. D. All of the above are correct. E. gonzo selection.

3. Game theory is concerned with A. predicting the results of bets placed on games like roulette. B. the choice of an optimal strategy in conflict situations. C. utility maximization by firms in perfectly competitive markets. D. the migration patterns of caribou in Alaska.

4. Which of the following is a nonzero-sum game? A. Prisoners’ dilemma B. Chess C. Competition among duopolists when market share is the payoff D. All of the above.

5. Which one of the following does measure risk? A. Coefficient of variation B. Standard deviation C. Expected value D. All of the above are measures of risk.

6. If a decision maker is risk averse, then the best strategy to select is the one that yields the A. highest expected payoff. B. b. lowest coefficient of variation. C. c. highest expected utility. D. d. lowest standard deviation.

7. A risk-return tradeoff function A. shows the minimum expected return required to compensate an investor for

accepting various levels of risk.

B. slopes upward for a risk averse decision maker. C. is horizontal for a risk neutral decision maker. D. All of the above are correct.

8. Which one of the following is a part of every game theory model? A. Players B. Payoffs C. Probabilities D. Strategies

9. In game theory, a choice that is optimal for a firm no matter what its competitors do is referred to as

A. the dominant strategy. B. the game-winning choice. C. super optimal.

10. If a firm sells its output on a market that is characterized by a single seller and many buyers of a homogeneous product for which there are no close substitutes and barriers to long-run resource

mobility, then the firm is

A. monopolist. B. an oligopolist. C. a perfect competitor. D. a monopolistic competitor.

PART II Answer all questions.

QUESTION 1 (4 MARKS)

The demand curve is q D = 100 - 5p and the supply curve is q

S = 5p.

a. A quantity tax of ¥2 per unit is placed on the good. Calculate the dead-weight loss of the tax. b. A value (ad valorem) tax of 20 % is placed on the good. Calculate the dead-weight loss of the tax.

QUESTION 2 (7 MARKS)

The demand function is q(p) = (p+1) -2

a. What is the price elasticity of demand?

b. At what price is the price elasticity of demand equal to minus one?

c. Write an expression for total revenue as a function of the price.

d. Answer a-c when the demand function takes the more general form q(p) = (p+a) b where a > 0 and

b < -1.

QUESTION 3 (Uncertainty) (3 MARKS)

Fan Lei Lei is a young graduate who earns an income of $100. She has the option of participating in a

lottery where she can win $30 with a probability of 0.5, and loose $30 with a probability of 0.5. Would

she participate if she is risk averse? What if she is a risk lover? Explain

Question 4 (6 MARKS)

Figure 1 below represent production and sales of “Reganmian” dish that is mostly enjoyed by dwellers

in Wuhan city. Use the markings to analyze the Figure 1 below.

Remarks: Additional marks will be awarded based on clarity of explanations and the use of examples.

¥5

¥3.5