Mathematical Economics Exam Preparation Guide
Course Introduction
Mathematical Economics is a course that explores the application of mathematical methods and models to analyze economic theories and problems. It covers fundamental concepts such as optimization, linear and nonlinear programming, comparative statics, and dynamic models, providing students with tools to rigorously examine consumer behavior, firm production, market equilibrium, and economic policy issues. By integrating algebra, calculus, and other mathematical techniques, the course enhances students' ability to formalize and solve complex economic problems, preparing them for advanced study and quantitative research in economics.
Recommended Textbook
Microeconomic Theory Basic Principles and Extensions 12th Edition by Walter Nicholson
Available Study Resources on Quizplus
17 Chapters
356 Verified Questions
356 Flashcards
Source URL: https://quizplus.com/study-set/2589
Page 2
Chapter 1: Preferences and Utility
Available Study Resources on Quizplus for this Chatper
14 Verified Questions
14 Flashcards
Source URL: https://quizplus.com/quiz/51559
Sample Questions
Q1) With this utility function,the bundle (3,2)provides the same utility as the bundle:
A)(2,3).
B)(2,4).
C)(2,5).
D)(3,3).
Answer: B
Q2) For this utility function,the MRS:
A)depends on the values of x and y.
B)is always 0.
C)is always 2.
D)is always 4.
Answer: C
Q3) If an individual's utility function is quasi-concave,his or her MRS will:
A)diminish as x is substituted for y.
B)increase as x is substituted for y.
C)be undefined except in special cases.
D)always depend only on the ratio of x to y.
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Utility Maximization and Choice
Available Study Resources on Quizplus for this Chatper
15 Verified Questions
15 Flashcards
Source URL: https://quizplus.com/quiz/51560
Sample Questions
Q1) The slope of the budget constraint line is:
A)the ratio of the prices (p<sub>x</sub>/p<sub>y</sub>).
B)the negative of the ratio of the prices (p<sub>x</sub>/p<sub>y</sub>).
C)the ratio of income divided by price of y (I/p<sub>y</sub>).
D)none of the above.
Answer: B
Q2) An increase in an individual's income without changing relative prices will:
A)rotate the budget constraint about the X-axis.
B)shift the indifference curves outward.
C)shift the budget constraint outward in a parallel way.
D)rotate the budget constraint about the Y-axis.
Answer: C
Q3) If this person starts from a utility maximizing position,an increase in income will cause:
A)more of both goods to be bought.
B)more of only good y to be bought.
C)more of only good x to be bought.
D)more x and less y to be bought.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Income and Substitution Effects
Available Study Resources on Quizplus for this Chatper
22 Verified Questions
22 Flashcards
Source URL: https://quizplus.com/quiz/51561
Sample Questions
Q1) If the prices of all goods increase by the same proportion as income,the quantity demanded of good x will:
A)decrease.
B)increase.
C)remain unchanged.
D)change in a way that cannot be determined from the information given.
Answer: C
Q2) The price elasticity of demand for a vertical demand curve is:
A)0.
B)-1.
C)1.
D)- infinity.
Answer: A
Q3) An individual's demand curve:
A)represents the various quantities that a consumer is willing to purchase of a good at various price levels.
B)is derived from an individual's indifference curve map.
C)will shift if preferences,prices of other goods,or income change.
D)all of these answers are correct.
Answer: D
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Demand Relationships Among Goods
Available Study Resources on Quizplus for this Chatper
18 Verified Questions
18 Flashcards
Source URL: https://quizplus.com/quiz/51562
Sample Questions
Q1) The primary additional insight provided by expanding the theory of demand from two to three goods is that a pair of goods may now be:
A)gross substitutes.
B)gross complements.
C)net substitutes.
D)net complements.
Q2) If a rise in the price x causes less y to be demanded:
A)x and y are gross complements.
B)x and y are gross substitutes.
C)x and y are net complements.
D)x and y are net substitutes.
Q3) If goods x and y are complements,then the cross price elasticity of demand between them will be:
A)positive.
B)negative.
C)zero.
D)infinity.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Uncertainty
Available Study Resources on Quizplus for this Chatper
19 Verified Questions
19 Flashcards
Source URL: https://quizplus.com/quiz/51563
Sample Questions
Q1) Risk-averse individuals will diversify their investments because this will:
A)increase their expected returns.
B)provide them with some much-needed variety.
C)reduce the variability of their returns.
D)reduce their transaction costs.
Q2) People who always choose not to participate in fair games are called:
A)risk takers.
B)risk averse.
C)risk neutral.
D)broke.
Q3) Faced with an uncertain situation,the best decision for a person obeying the von-Neumann Morgenstern axioms:
A)minimizes loss relative to the status quo.
B)minimizes variability across possible outcomes.
C)maximizes the expected payoff.
D)maximizes expected utility.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Game Theory
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/51564
Sample Questions
Q1) The strategy profile in which both players remain silent in the Prisoners' Dilemma can be described as:
A)non-Pareto optimal and unstable.
B)Pareto optimal and unstable.
C)non-Pareto optimal and stable.
D)Pareto optimal and stable.
Q2) In the mixed-strategy Nash equilibrium of the following game in which players randomize between B and C and do not play A at all,what is the probability that each plays B?
A)3/4
B)1/2
C)1/4
D)1/3
Q3) Which statement is true of the Battle of the Sexes game?
A)It is a coordination game.
B)The mixed-strategy Nash equilibrium provides players with lower expected payoffs than other equilibria.
C)The first mover has an advantage in the sequential version.
D)All of the above.
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Production Functions
Available Study Resources on Quizplus for this Chatper 14
Source URL: https://quizplus.com/quiz/51565
Sample Questions
Q1) The average productivity of labor reaches its maximum:
A)at the point of inflection of the total product curve.
B)where the slope of the total product curve is steepest.
C)where the slope of the total product curve is zero.
D)where marginal and average productivity are equal.
Q2) The marginal physical productivity of labor is defined as:
A)a firm's total output divided by total labor input.
B)the extra output produced by employing one more unit of labor while allowing other inputs to vary.
C)the extra output produced by employing one more unit of labor while holding other inputs constant.
D)the extra output produced by employing one more unit of capital while holding labor input constant.
Q3) If more and more labor is employed while keeping all other inputs constant,the marginal physical productivity of labor will eventually:
A)increase.
B)decrease.
C)remain constant.
D)cannot tell from the information provided.
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Cost Functions
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/51566
Sample Questions
Q1) A linear total cost curve which passes through the origin implies that:
A)average cost is constant and marginal cost is variable.
B)average cost is variable and marginal cost is constant.
C)average and marginal costs are constant and equal.
D)need more information to answer question.
Q2) Technical progress will:
A)shift a firm's production function and its related cost curves.
B)not affect the production function,but may shift cost curves.
C)shift a firm's production function and alter its marginal revenue curve.
D)shift a firm's production function and cause more capital (and less labor)to be hired.
Q3) The firm's expansion path records:
A)profit-maximizing output choices for every possible price.
B)cost-minimizing input choices for all possible output levels for when input rental rates expand along with production.
C)cost-minimizing input choices for all possible output levels for a fixed set of input prices.
D)cost-minimizing input choices for profit-maximizing output levels.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Profit Maximization
Available Study Resources on Quizplus for this Chatper
32 Verified Questions
32 Flashcards
Source URL: https://quizplus.com/quiz/51567
Sample Questions
Q1) If the demand faced by a firm is elastic,selling one less unit of output will:
A)increase revenue.
B)decrease revenue.
C)keep revenues constant.
D)decrease price.
Q2) If a firm wished to maximize total revenues,it should produce where:
A)marginal cost is zero.
B)marginal revenue is zero.
C)marginal revenue is equal to marginal cost.
D)marginal revenue is equal to price.
Q3) If a firm is a price taker,its marginal revenue is:
A)equal to market price.
B)less than market price.
C)greater than market price.
D)a multiple of market price that may be either greater than or less than one.
Q4) A firm's marginal revenue is defined as:
A)the ratio of total revenue to total quantity produced.
B)the additional output produced by lowering price.
C)the additional revenue received due to technical innovation.
D)the additional revenue received when selling one more unit of output.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: The Partial Equilibrium Competitive Model
Available Study Resources on Quizplus for this Chatper
32 Verified Questions
32 Flashcards
Source URL: https://quizplus.com/quiz/51568
Sample Questions
Q1) The market demand curve for any good is:
A)independent of individuals' demand curves for the good.
B)the vertical summation of individuals' demand curves.
C)the horizontal summation of individuals' demand curves.
D)derived from the firm's marginal cost of production.
Q2) When prices drop in response to a decline in demand for an increasing cost industry:
A)producer surplus will increase but rents may decrease.
B)rent earned by elastically supplied inputs will decline by more than rent earned by inelastically supplied inputs.
C)rent earned by elastically supplied inputs will decline by less than rent earned by inelastically supplied inputs.
D)both producer surplus and rents will increase.
Q3) Price controls:
A)are always popular with consumers because they lower prices.
B)create shortages.
C)increase producer surplus because firms can now sell a greater quantity of a good at a lower price.
D)are necessary to preserve equity.
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: General Equilibrium and Welfare
Available Study Resources on Quizplus for this Chatper
24 Verified Questions
24 Flashcards
Source URL: https://quizplus.com/quiz/51569
Sample Questions
Q1) Every allocation of goods in a one good world is efficient because:
A)MRSs are equalized.
B)there is enough to go around for everyone.
C)no one can be made better off without making someone else worse off.
D)it doesn't matter to whom an extra unit of the good is given.
Q2) The rate of product transformation (RPT)measures the ability of:
A)a consumer to trade one good for another while still maximizing his or her utility.
B)a firm to substitute one input for another and still maintain the same production level.
C)society to substitute the production of one good for another while still using a fixed supply of inputs efficiently.
D)a firm to produce a final good while starting with only natural resources.
Q3) 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)there is no reason to expect that voluntary trading will result in an equitable allocation of the available resources.
D)none of the above.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Monopoly
Available Study Resources on Quizplus for this Chatper
22 Verified Questions
22 Flashcards
Source URL: https://quizplus.com/quiz/51570
Sample Questions
Q1) 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 MC.
C)the one point on the demand curve that corresponds to the quantity for which MR equals MC.
D)the entire demand curve above the point where price is equal to average cost.
Q2) A price discriminating monopolist having identical costs in two separated markets should charge a higher price in that market:
A)which has a higher demand.
B)which has a more elastic demand.
C)which has a less elastic demand.
D)which has a higher marginal revenue.
Q3) A profit maximizing monopoly will produce that output for which:
A)marginal revenue equals price.
B)average cost is minimized.
C)marginal cost is minimized.
D)marginal cost equals marginal revenue.
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Imperfect Competition
Available Study Resources on Quizplus for this Chatper
21 Verified Questions
21 Flashcards
Source URL: https://quizplus.com/quiz/51571
Sample Questions
Q1) A cartel-like collusive solution can be a Nash equilibrium only in price-setting games with:
A)infinite replications.
B)finite replications.
C)dominant strategies.
D)more than two players.
Q2) The Nash equilibrium in a Bertrand game of price setting where all firms have different marginal cost is:
A)efficient because all mutually beneficial transactions will occur.
B)efficient because of the free entry assumption.
C)inefficient because some mutually beneficial transactions will be foregone.
D)inefficient because of the uncertainties inherent in the game.
Q3) A profit-maximizing firm should spend an additional dollar on advertising so long as this expenditure results in more than one dollar of:
A)additional sales.
B)reduced costs.
C)increased profits.
D)demand.
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: Labor Markets
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/51572
Sample Questions
Q1) "Compensating wage differentials" arise because:
A)workers possess different skills.
B)workers prefer the characteristics of some to those of others.
C)firms pay higher wages for workers with higher marginal productivities.
D)firms discriminate in hiring.
Q2) Which of the following best explains why the elasticity of supply of labor for an individual with a Cobb-Douglas utility function (for consumption and leisure)is zero?
A)Income and substitution effects are precisely offsetting.
B)The elasticity of substitution of leisure for consumption is zero.
C)Leisure is an inferior good.
D)Consumption is subject to diminishing marginal utility.
Q3) For a monopsonistic hirer of labor,the gap between labor's marginal revenue product and its wage rate will be greater:
A)the more elastic the supply curve for labor.
B)the more inelastic the supply curve for labor.
C)the more elastic the firm's demand for labor.
D)the more inelastic the firm's demand for labor.
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Capital and Time
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/51573
Sample Questions
Q1) If the interest rate rises,the present discounted value of a stream of payments owed in the future:
A)rises.
B)stays constant.
C)falls.
D)may rise or fall depending on the shape of the stream.
Q2) Under competitive conditions,the relative price of a finite resource would be expected to:
A)rise at an increasing rate.
B)rise at a rate equal to the real interest rate.
C)rise at a rate equal to the nominal interest rate.
D)rise at a rate determined by demand conditions.
Q3) In Fisher's model of the determination of the rate of return,the price of a "future good" is:
A)less than the price of a current good if the interest rate is negative.
B)equal to the price of a current good if the interest rate is positive.
C)greater than the price of a current good if the interest rate is positive.
D)less than the price of a current good if the interest rate is positive.
To view all questions and flashcards with answers, click on the resource link above.
17
Chapter 16: Asymmetric Information
Available Study Resources on Quizplus for this Chatper
18 Verified Questions
18 Flashcards
Source URL: https://quizplus.com/quiz/51574
Sample Questions
Q1) Which of the following illustrates adverse selection?
A)Individuals sometimes mistakenly buy defective cameras.
B)Individuals will not search for bargains for low cost items.
C)Individuals know a lot about their family health history when they buy insurance.
D)Individuals can choose whether to drive safely or not.
Q2) Fill in the blanks: _____ is an important constraint in the moral-hazard problem because _____.
A)The budget constraint ----it ensures the principal has enough money to pay the agent
B)The participation constraint ---it ensures the agent chooses the action in the principal's best interest
C)The participation constraint ----it ensures the principal is willing to offer the contract
D)The incentive-compatibility constraint -----it ensures the agent chooses the action intended in the contract
To view all questions and flashcards with answers, click on the resource link above.
18
Chapter 17: Externalities and Public Goods
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/51575
Sample Questions
Q1) Society's demand curve for a public good:
A)is given by the horizontal summation of individual demand curves.
B)is given by the vertical summation of individual demand curves.
C)cannot be derived from individual demand curves due to the nature of a public good.
D)is given by the average citizen's individual demand curve.
Q2) The "free-rider problem" of public goods refers to:
A)individuals' refusal to pay taxes.
B)individuals' attempts to hide their preferences for collective goods and to avoid paying for them.
C)individuals' over-use of collective goods.
D)the inelasticity of individuals' demands for public goods.
Q3) If bargaining is costless and an externality exists:
A)an efficient outcome may be reached depending on which party is assigned property rights.
B)an efficient outcome will be reached regardless of which party is assigned property rights.
C)an efficient outcome will not be reached without government intervention.
D)an efficient outcome can never be reached.
To view all questions and flashcards with answers, click on the resource link above. Page 19