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SampleMT A

The document is a sample midterm exam for an Intermediate Microeconomics course, featuring various questions on topics such as monopolies, exchange economies, and utility functions. It includes true/false questions requiring explanations, as well as problem-solving tasks related to indifference curves, contract curves, and price discrimination. The exam is structured to assess students' understanding of key microeconomic concepts and mathematical applications.

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manas.juve
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2 views

SampleMT A

The document is a sample midterm exam for an Intermediate Microeconomics course, featuring various questions on topics such as monopolies, exchange economies, and utility functions. It includes true/false questions requiring explanations, as well as problem-solving tasks related to indifference curves, contract curves, and price discrimination. The exam is structured to assess students' understanding of key microeconomic concepts and mathematical applications.

Uploaded by

manas.juve
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Sample MidTerm Exam

Intermediate Microeconomics
Fall 2024
1. 3 10 = 30
True/False questions, attempt any three. Give a 2/3 sentence explanation and include
the mathematical formula whenever necessary.
(a) A monopolist always causes deadweight loss.
(b) In a pure exchange economy with two agents and two goods, given any endowment,
the agents always prefer a Pareto optimal allocation rather than the endowment
point.
(c) Any point in the core is Pareto optimal.
(d) A Competitive Equilibrium in a pure exchange economy always ensures fairness.
(e) A natural monopolist makes economic loss.
2. 10 + 10 + 10 + 10 = 40
Consider an exchange economy with two goods: and two agents. One of the agents is
A, whose preferences are represented by utility function:
uA (xA ; yA ) = xaA yAb
a; b 2 (0; 1)
The other agent is M. She has preferences represented by utility function
uM (xM ; yM ) = xM yM

Initial endowments are: wA = (5; 5) and wM = (5; 5):


(a) Draw two representative Indi¤erence Curves for M, and the endowment point,
clearly labeling the axes and the values in an Edgeworth Box.
(b) Find the equation of the contract curve.
(c) For which values of a; b the endowment point is on the Core?
(d) De…ne the Walrasian equilibrium.
3. 15 + 15 = 30
Suppose a monopolist faces a market that has two segments: market 1 and market 2.
The demand curves are:
market 1 : q = 10 p
market 2 : q = 5 p

Monopolist’s total cost is: C (q) = 2q


(a) If the monopolist can practice third degree price discrimination, what would be
the optimal prices?
(b) If the monopolist is prohibited to practice 3rd degree price discrimination, what
would be the single optimal price?

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