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Microeconomics I
Quiz #2
學號：
4/12, 2007
I. 選擇題(30%)

1.
答案請寫在 p.4 的表格中，否則不計分。
Suppose two coffee snobs who must have their coffee and cream in exact proportions (each cup is
10 coffee per 1 unit cream) are invited to a weekend long event (during which they can easily
consume 8 cups of coffee). Suppose Snob A is given 8 units of cream and Snob B is given 80
units of coffee. The contract curve in the Edgeworth box would be
a. a right angle connecting the lower left corner with the upper right corner.
b. a curve (not a line) connecting the lower left corner with the upper right corner.
c. a line connecting the lower left corner with the upper right corner.
d. a right angle connecting the upper left corner with the lower right corner.
2.
3.
Suppose two coffee snobs who must have their coffee and cream in exact proportions (each cup is
10 coffee per 1 unit cream) are invited to a weekend long event (during which they can easily
consume 8 cups of coffee). Suppose Snob A is given 8 units of cream and Snob B is given 80
units of coffee. The post trading result (one in which any trade that makes both parties better off
than their initial allocation) will guarantee each person
a. nothing
b. at least 1 cup of properly made coffee.
c. at least 2 cups of properly made coffee.
d. exactly 4 cups of properly made coffee.
The reason externalities distort the allocation of resources is that
a. too few goods are usually produced.
b. firms often go out of business because of the externality.
c. a firm’s private costs do not reflect the social cost of production.
d. regulating externalities uses scarce resources.
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4.
Under a perfectly competitive price system
a. an equitable allocation of the available resources will always result.
b. there is no opportunity for individuals to trade amongst themselves.
c.
5.
there is no reason to expect that voluntary trading will result in an equitable allocation
of the available resources.
d. None of the above will result.
Consider three ways of allocating two goods in a two-person exchange economy.
I.
Both individuals take prices as given and equilibrium prices are
established by an impartial auctioneer.
II. One individual can act as a perfect price discriminator and force the other
individual to pay a different price for each unit of a good that is traded.
III.
One individual is a monopolist and can charge the other individual a
single, utility-maximizing price.
Which of these situations is efficient?
a. None of them.
b. Only I.
6.
d.
e.
c. I and II, but not III.
In free exchange among two individuals the position on the contract curve finally arrived at will,
among other things, depend on:
I.
The bargaining strength of each individual.
II.
III.
The initial endowments of the individuals.
The individuals’ preferences.
Which of these correctly completes the statement?
a. Only III.
d.
7.
II and III, but not I.
b. Only II.
e. I, II, and III.
c. I and III, but not II.
Suppose a monopolist has a cost structure such that TC = .1Q2 - 2Q + 100 and MC = .2Q - 2 and
face demand such that QD = 86 - P. The perfectly competitive dead weight loss would be
a.
b.
8.
I and III, but not II.
All of them.
c.
d.
All monopolies exist because of
a. firms’ desire to maximize profits.
b. failure of antitrust laws.
c. barriers to entry.
d. natural selection.
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9.
A natural monopoly
a.
is a monopoly in the production of raw materials.
b.
occurs when one firm can supply the entire market more cheaply than can a number
of firms.
c. is one result of a patent.
d. necessarily involves inefficient pricing.
10. The supply curve for a monopoly is given by
a. the firm’s marginal cost curve above the average variable cost curve.
b. the one point on the demand curve that corresponds to the quantity for which price is equal
to marginal cost.
c.
the one point on the demand curve that corresponds to the quantity for which
marginal revenue equals marginal cost.
d. the entire demand curve above the point where price is equal to average cost.
11. The principal difference between economic profits for a monopolist and for a competitive firm is
that
a. monopoly profits create major problems of equity whereas competitive profits do not.
b.
competitive profits exist only in the short run whereas monopoly profits may exist in
the long run as well.
c. monopoly profits represent a transfer out of consumer surplus whereas competitive profits
do not.
d. monopoly profits are usually larger than competitive profits.
12. Perfect price discrimination
a. is a common occurrence in situations with many buyers.
b. occurs fairly often in situations with only a few buyers.
c. is only observed in competitive markets.
d.
rarely occurs because firms do not have sufficient power to differentiate among
specific buyers.
13. Suppose there are two firms Boors and Cudweiser, each selling identical-tasting nonalcoholic
beer. Suppose Boors and Cudweiser are not viewed as perfect substitutes but rather demand for
Boors is
and demand for Cudweiser is
.
For simplicity, assume zero marginal costs. Note the reaction functions are
and
Given the demand functions, before doing computations you know
a.
b.
c.
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14. In the cartel model
a.
firms believe that price increases result in a very elastic demand, while price decreases
result in an inelastic demand for their products.
b. each firm acts as a price taker.
c. one dominant firm takes the reactions of all other firms into account in its output and
pricing decisions.
d. firms coordinate their decisions to act as a multiplant monopoly.
15. In a Cournot equilibrium each firm chooses an output level that
a. maximizes joint profits.
b. maximizes the price received.
c. maximizes profits given what the other firm produces.
d. maximizes revenue given what the other firm produces.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
C
B
C
C
C
E
A
C
B
C
B
D
A
D
C
Ⅱ. 是非題 (20%)
Response to each statement true, false, or uncertain and then justify your response. The
justification of your response is the most important part of your answer.
1.
Monopoly profits depend on the relationship between the demand and average cost
curvese.
【True】
See lectures!
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2.
The supply curve for a monopoly is given by the firm’s marginal cost curve above the
average cost curve.
【False】
獨佔廠商沒有供給曲線。See lectures for detail !
3.
A movement to the contract curve from off the curve represents mutually beneficial
trades, but a movement along the curve does not since one of the parties is always worse
off.
【True】
See lectures!
4.
Each firm in a cartel has an incentive to chisel because market price exceeds average cost.
【False】
marginal cost
只要價格超過邊際成本，廠商每增加一單位的產出就可以獲取價格和邊際成本的差價。
因此，當價格低於該廠商的邊際成本時，該廠商就會有誘因增加產量已獲取更高的個別
廠商利潤。
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Ⅲ、計算問答題 (50%)
1. Jack obtains utility from the quantity of beef he consumes in one day (B), the quantity of
wines he consumes that day (W), and the hours of leisure time he has during the day (H)
according to the utility function：
Utility  B1 2W 1 4 H 1 4
Jack’s production of beef is given by
B  LB
(where LB is the hours he spends to butcher cattle), and his production of wines is
determined by
W  2 LW
(where Lw is the time be spends to produce wines).
Assuming that Jack decides to work an eight-hour day (that is,H=16), graph his production
possibility curve for beef and wines. Show his optimal choices of those goods. （20%）
(解)
(1) 知在 PPC 上均表示要素充分利用
B  LB  LB  B 2
1
W  2 LW  LW  W 2
4
1
LB  LW  8  B 2  W 2  8  PPC
4
(2) 對 PPC 全微分：
1
2 BdB  WdW  0
2
dB W
 MRT  

dW 4 B
MRS 
B
2W
均衡時： MRS  MRT 
 B2 
B
W

 W 2  2 B 2 代入 PPC
2W 4 B
1
16
(負不合)
2 B 2   8  B*  

4
3
W*  
32
(負不合)
3
6
2. Suppose a perfectly competitive industry can produce Roman candles at a constant marginal
cost of $10 per unit. Once the industry is monopolized, marginal costs rise to $12 per unit
because $2 per unit must be paid to lobbyists to ensure that only this firm receives a Roman
candle license. Suppose the market demand for Roman candles is given by
QD  1000  50 P
and the marginal revenue curve by
MR  20  Q 25
(a) Calculate the perfectly competitive and monopoly outputs and prices. （5%）
(b) Calculate the total loss of consumer surplus from monopolization of Roman candle
production. （5%）
(c) Graph your results. （5%）
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3. Suppose there are two firms selling ice cream cones in a small town. The prices charged by
the firms are given by P1 and P2. Because the firms sell different types of cones, their goods
are only partial substitutes for one another. The demand facing firm 1 is given by
Q1  10  P1  0.5P2
And that facing firm 2 is
Q2  10  P2  0.5P1
Both firms have a constant marginal cost of $2 per cone.
(a) Suppose each firm sets a price equal to marginal cost. How many cones will each sell and
what will each firm’s profits be? （5%）
(b) Please find the Cournot equilibrium P1, P2, Q1 and Q2 for this market. （5%）
(c) Suppose the two firms merged. What pricing policy would maximize their total joint
profits? (Assume they should each charge the same price) （5%）
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