Intermediate Microeconomic Theory
Intermediate Microeconomic Theory ECON 3070
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This 2 page Class Notes was uploaded by Bridie Batz on Friday October 30, 2015. The Class Notes belongs to ECON 3070 at University of Colorado at Boulder taught by Staff in Fall. Since its upload, it has received 24 views. For similar materials see /class/232142/econ-3070-university-of-colorado-at-boulder in Economcs at University of Colorado at Boulder.
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Date Created: 10/30/15
i N E i i 19 Econ 3070 Exam 3 Practice Problems A Mushfiq Mobarak What is the probability of getting a five or higher when you roll a die What is the probability of getting an odd number You make the following bet with your friend You roll a die and you get paid the number that shows up on the die if an odd number shows up You pay your friend the number that shows up on the die if an even number shows up What is your expected earnings Pickle consumes 0102 and earns 77117712 in periods 1 and 2 respec tively The interest rate is r a Write down Pickle s intertemporal budget constraint in present value terms b If Pickle doesn t consume anything in period 1 what is the most he can consume in period 2 What do we call this 0 1f Pickle doesn t consume anything in period 2 what is the most he can consume in period 1 What exactly does he have to do to attain this consumption pattern What do we call this quantity d What is the slope of Pickle s budget line Dan s utility function is E where c is his wealth Dan has 50000 in safe assets and he also has a house located in an area where there is the possibility of forest fires If there is a fire the remains of his house will be worth 40000 If it doesn t burn the house will be worth 200000 The probability that his home will burn is 001 a What is Dan s expected utility if he does not buy fire insurance b Suppose Dan can buy fire insurance at a price of 1 per 100 of insurance Show that if he buys 160000 worth of insurance he will be fully insured in the sense that his wealth will be the same no matter what happens What is this the value of this wealth Compute the inverse demand curve and price elasticity of demand for the following demand functions 7100 317 10111049 The demand for a product is lnq 1000 7 p lnm where p is price and m is income What is the price and income elasticities when p 2 9 He and m 500 The demand function for a product is p 10 7 q At What price will total revenue realized from its sale be at a maximum How many units will be sold at that price The shortrun production function of a competitive firm is fL 6L23 Where L is labor The cost of labor is w 6 and the price per unit of output isp 3 a What is the slope of the isoprofit lines b How many units of labor will the firm hire c How much output will it produce d How much will its total profits be
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