Mathematical Economics
Midterm Exam
Course Introduction
Mathematical Economics applies mathematical techniques and models to analyze and solve problems in economics. This course explores how mathematical tools, such as calculus, linear algebra, and optimization methods, can be used to formalize economic theories and quantitatively analyze economic behavior. Students will learn to construct and interpret models concerning consumer and producer behavior, market equilibrium, comparative statics, and economic dynamics, providing a rigorous foundation for advanced study in economics and practical applications in economic research and policy-making.
Recommended Textbook
Microeconomics Theory and Applications with Calculus 3rd Edition by Jeffrey M. Perloff
Available Study Resources on Quizplus
19 Chapters
2075 Verified Questions
2075 Flashcards
Source URL: https://quizplus.com/study-set/1883
Page 2
Chapter 1: Introduction
Available Study Resources on Quizplus for this Chatper
43 Verified Questions
43 Flashcards
Source URL: https://quizplus.com/quiz/37603
Sample Questions
Q1) The analysis of the competition between Apple and Samsung in the smartphone market is based on
A) microeconomic model.
B) educated guessing.
C) intuitive reasoning.
D) consumer surveys.
Answer: A
Q2) Microeconomics is often called
A) price theory.
B) decision science.
C) scarcity.
D) resource theory.
Answer: A
Q3) Every economic model should include money as a variable.This statement is
A) true, because every transaction in the economy uses money.
B) true, because the federal reserve is very important.
C) false, because some transactions in the economy are transacted without money.
D) false, because a model can get unnecessarily complex if it includes money.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Supply and Demand
Available Study Resources on Quizplus for this Chatper
226 Verified Questions
226 Flashcards
Source URL: https://quizplus.com/quiz/37604
Sample Questions
Q1) The short-run elasticity of supply is less than the long-run elasticity of supply
A) because consumers' tastes and preferences change in the long run but not in the short run.
B) because producers can adjust the amount of machinery in the long run but not in the short run.
C) only for durable goods.
D) only for non-durable goods.
Answer: B
Q2) Suppose the demand for widgets is given by QD = 100 - 5p - pd + 2I,where I is average consumer income,p is the price of lemons,and pd is the price of doodads.According to this equation,doodads are a(n)________ for widgets.
A) substitute
B) complement
C) input
D) None of the above.
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: A Consumers Constrained Choice
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/37605
Sample Questions
Q1) If the price of one good increases while the price of the other good and the consumer's income remain unchanged,what will happen to the budget line?
A) The budget line rotates inward from the intercept on the axis of the good that did not change in price.
B) The budget line rotates outward from the intercept on the axis of the good that did not change in price.
C) The budget line shifts inward without a change in slope.
D) The budget line shifts outward without a change in slope.
Answer: A
Q2) Johnny has $100 to spend on books and all other goods.Books cost $20 each and Johnny is at equilibrium consuming 3 books and $40 worth of other goods.Johnny's grandmom wants to give Johnny either a book or $20 for his birthday.Which gift does Johnny prefer? Explain using an indifference map and budget lines. Answer: 11ea57b3_0cf2_9bc8_ace2_f7c3d555d00b_TB5321_00 See the above figure.Since Johnny's equilibrium book consumption exceeds the quantity of books in the gift-in-kind,Johnny is indifferent between receiving the book or the cash.Had Johnny been consuming less than one book,he would have preferred the cash.
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Demand
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/37606
Sample Questions
Q1) A consumer's utility function is given by: U(x,y)= 10xy
Currently,the prices of goods x and y are $3 and $5,respectively,and the consumer's income is $150.
a.Find the MRS for this consumer for any given bundle (x,y).
b.Find the optimal consumption bundle for this consumer.
c.Suppose the price of good x doubles.How much income is required so that the consumer is able to purchase the original consumption bundle (if you were unable to solve d.,then take a guess at what the optimal bundle is before solving this)
d.Now that the price of good x has doubled,how much income is needed for the consumer to reach the original level of utility? Is this more or less that what you found in e.?
Q2) A Consumer Price Index adjustment overcompensates for inflation because it ignores
A) the income effect when relative prices change.
B) the substitution effect when relative prices change.
C) that some goods are inferior.
D) that the substitution effect may offset the income effect.
Q3) Why can't all goods be inferior?
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Consumer Welfare and Policy Analysis
Available Study Resources on Quizplus for this Chatper
73 Verified Questions
73 Flashcards
Source URL: https://quizplus.com/quiz/37607
Sample Questions
Q1) Kisa consumes the same amount of cigarettes each week regardless of her income (assume that her income is sufficiently large such that the quantity is affordable).The Equivalent Variation equals the Compensating Variation.
A)True
B)False
Q2) Sarah and David both have linear demand curves for lemonade.Sarah's demand curve for lemonade intersects David's demand curve at a price of 50 cents per glass.Sarah's demand curve is more inelastic than David's.A change in the price of lemonade from 50 cents to 25 cents per glass will
A) decrease Sarah's consumer surplus more than David's.
B) decrease David's consumer surplus more than Sarah's.
C) increase Sarah's consumer surplus more than David's.
D) increase David's consumer surplus more than Sarah's.
Q3) If a person supplies more hours of labor in response to a wage increase,then
A) the substitution effect is greater than the income effect.
B) the income effect is greater than the substitution effect.
C) the income effect equals the substitution effect.
D) the person is not maximizing utility.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Firms and Production
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/37608
Sample Questions
Q1) Explain the difference between diminishing returns to labor and diminishing marginal returns to labor.
Q2) The above figure shows the isoquants for producing steel.When producing less than 10,000 tons there are
A) increasing returns to scale.
B) decreasing returns to scale.
C) constant returns to scale.
D) diseconomies of scale.
Q3) To say that isoquants are convex is to say that
A) the marginal rate of technical substitution falls as labor increases.
B) capital and labor are perfect substitutes.
C) labor, but not capital, is subject to the law of diminishing marginal returns.
D) there are constant returns to scale.
Q4) Average productivity will fall as long as A) marginal productivity is falling.
B) it exceeds marginal productivity.
C) it is less than marginal productivity.
D) the number of workers is increasing.
Q5) Explain why labor might not always be a variable input.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Costs
Available Study Resources on Quizplus for this Chatper
132 Verified Questions
132 Flashcards
Source URL: https://quizplus.com/quiz/37609
Sample Questions
Q1) If the total cost of production for 1000 widgets is $2000 and marginal cost is constant at $1,what is the average cost if 2000 widgets are produced?
A) $2
B) $1.5
C) $1
D) $0.5
Q2) A production possibilities frontier that is a downward-sloping straight line implies A) economies of scale.
B) diseconomies of scale.
C) economies of scope.
D) no economies of scope.
Q3) If the total cost of production for 1000 widgets is $2000 and marginal cost is constant at $1,what is the average fixed cost for the 1000 widgets?
A) $2
B) $1.5
C) $1
D) $0.5
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Competitive Firms and Markets
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/37610
Sample Questions
Q1) A firm should always shut down if its revenue is
A) declining.
B) less than its average fixed costs.
C) less than its total costs.
D) less than its avoidable costs.
Q2) A market's structure is described by
A) the number of firms in the market.
B) the ease with which firms can enter and exit the market.
C) the ability of firms to differentiate their product.
D) All of the above.
Q3) Gift shops in a small town sell identical mugs to tourists.However,tourists don't have enough time to check out the prices one by one and don't have brochures listing prices of mugs.We can conclude
A) the market for mugs is perfectly competitive.
B) buyers have full information.
C) sellers are price takers.
D) the market is not perfectly competitive.
Q4) The long-run supply curve in a competitive market is upward sloping.
A)True
B)False
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Properties and Applications of the Competitive Model
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/37611
Sample Questions
Q1) The above figure shows the demand and supply curves in the market for milk.Currently the market is in equilibrium.If the government establishes a $2 per gallon price ceiling to ensure that children are nourished,estimate the change in p,Q,and social welfare.
Q2) If entry is limited due to a limited input,firms in that market earn long run economic profit.
A)True
B)False
Q3) A ban on imports,a tariff,or a quota raises the price to domestic consumers.This means that consumers will buy less of the product at a higher price.The loss associated with this is called
A) production associated loss.
B) productive consumption loss.
C) consumption distortion loss.
D) consumer misperception loss.
Q4) Producer surplus equals
A) total revenue minus total variable cost.
B) total revenue minus the sum of all marginal cost.
C) profit plus fixed cost.
D) All of the above.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: General Equilibrium and Economic Welfare
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/37612
Sample Questions
Q1) At a given point in time,the Rawlsian welfare function gives equal weight to each individual's utility.
A)True
B)False
Q2) Explain how it is possible for one of two people in a two-good economy to have an absolute advantage in producing both goods,but trade can still benefit both people.
Q3) The above figure depicts the Edgeworth box for two individuals,Al and Bruce.The contract curve can be found by connecting points
A) a and b.
B) a and c.
C) b and d.
D) c and d.
Q4) The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Considering only the labeled points,point c is a possible equilibrium
A) only if it is the endowment.
B) only if point a is the endowment.
C) if either point a or b is the endowment.
D) only if point d is the endowment.
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Monopoly and Monopsony
Available Study Resources on Quizplus for this Chatper
141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/37613
Sample Questions
Q1) If a monopoly discovers that the demand for its output has become more elastic at the original output level,then it will respond by
A) producing more and setting a higher price.
B) setting a lower price.
C) setting a higher price.
D) producing more while leaving price unchanged.
Q2) Government actions that create monopolies
A) spur product innovation by the monopoly.
B) create deadweight loss.
C) result in lower average costs of production.
D) ensure that firms price at marginal cost.
Q3) Show with a graph that an increase in the minimum wage can increase the level of employment in a monopsony market.
Q4) If the government attempts to force a natural monopoly to charge a price equal to marginal cost,
A) the natural monopoly will shut down.
B) the natural monopoly will still make high profits.
C) the natural monopoly's marginal cost curve will shift up.
D) total welfare is maximized.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Pricing and Advertising
Available Study Resources on Quizplus for this Chatper
91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/37614
Sample Questions
Q1) Suppose all individuals are identical,and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2)q where p is price in $ per hour and q is hours per month.The firm faces a constant marginal cost of $1.The profit maximizing two-part tariff yields results in the firm selling
A) 4.5 hours.
B) 10 hours.
C) 5 hours.
D) 8 hours.
Q2) Coupons represent a form of price discrimination because they offer a low-cost way for firms to
A) identify customers with apparently more elastic demand and offer them a lower price.
B) retain loyal customers who are not price sensitive.
C) offer discounts to consumers who buy larger quantities.
D) perfectly price discriminate.
Q3) Suppose two countries,A and B,are at war with each other.Country A is very wealthy; country B is very poor.The XYZ Co.produces tanks.Is XYZ able to set a different price for the tank sold to country A than the price for the tank sold to country B? Explain.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Game Theory
Available Study Resources on Quizplus for this Chatper
84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/37615
Sample Questions
Q1) The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,how many Nash equilibria are there?
A) 0
B) 1
C) 2
D) It cannot be determined.
Q2) The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,what happens if the government imposes a $20 per firm tax on firms that service this route?
A) Neither firm has a dominant strategy.
B) Not entering is a dominant strategy for both firms.
C) Neither firm entering is a Nash equilibrium.
D) Only firm A will enter.
Q3) Explain why it is unwise to bid more than your valuation of the good in a sealed bid second-price auction.
Q4) The above figure shows the payoff matrix facing an incumbent firm.Assuming a fixed cost of entry,will the incumbent deter entry? Why?
Q5) Why is collusion more likely in a repeated game?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Oligopoly and Monopolistic Competition
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/37616
Sample Questions
Q1) Consider a market with just one firm.The demand in the market is p = 18 - Q and the firm has a linear cost function C(Q)= 2Q.
a.How much output will this firm produce.What will be the profit and consumers surplus?
b.Suppose a second firm with the same cost function enters the market and the two firms compete in a Cournot style (simultaneous output choice).What will be the equilibrium price and quantity in the market? What is the total market profit and CS?
Q2) If there are 2 identical firms in a market that choose the quantity they produce,total welfare is the highest when there is a cartel.
A)True
B)False
Q3) Two identical firms that share a market and produce a homogeneous good will find which of the following market outcomes LEAST desirable?
A) Bertrand Oligopoly
B) Cournot Oligopoly
C) Cartel
D) All are equally preferable.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Factor Markets
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/37617
Sample Questions
Q1) The marginal revenue product of labor is usually downward sloping.
A)True
B)False
Q2) In a perfectly competitive resource market,the Marginal Revenue Product Curve is A) vertical.
B) horizontal.
C) downward-sloping.
D) upward sloping.
Q3) The amount of labor a firm employs depends on
A) the market wage.
B) the market price for the good produced.
C) Both A and B.
D) None of the above.
Q4) To derive the labor market demand curve,the labor demand curves for each firm in the output market of interest are summed.
A)True
B)False
Q5) How does a competitive firm's demand for labor react to a specific tax on each unit of output it sells?
Page 17
Q6) In an economy with no inflation,explain why interest rates are positive.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Uncertainty
Available Study Resources on Quizplus for this Chatper
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/37618
Sample Questions
Q1) Which of the following losses to an individual would an insurance company NOT cover?
A) The person's automobile is stolen.
B) Fire destroys the person's home.
C) The person's father dies.
D) The person's country is invaded.
Q2) Insurance companies do not cover losses that would
A) happen to all of the policyholders at once.
B) happen with a very low probability.
C) happen to just a handful of policyholders.
D) happen with uncertainty.
Q3) Expected value represents
A) the actual payment one expects to receive.
B) the average of all payments one would receive if one undertook the risky event many times.
C) the payment one receives if he or she makes the correct decision.
D) the payment that is most likely to occur.
Q4) A fair game is a game in which the chances are 50-50 that you win or lose.
A)True
B)False
Page 18
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: Property Rights, externalities, rivalry, and Exclusion
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/37619
Sample Questions
Q1) The result that,under certain circumstances,no government action is needed to control an externality because it can be eliminated by bargaining between the affected parties is called
A) a Nash equilibrium.
B) Coase Theorem.
C) Bargaining Theorem.
D) English Bargaining.
Q2) Suppose that in the market for paper,demand is p = 100 - Q.The private marginal cost is MCP = 10 + Q.Pollution generated during the production process creates external marginal harm equal to MC = Q.Is social welfare greater under monopoly or under competition?
Q3) Fishermen on the East Coast are using lobster traps out of which most of the lobsters that enter can escape.Why?
A) It will make over-fishing less likely.
B) They can't come up with better traps.
C) They are not educated enough to maximize profit.
D) They catch more lobsters this way.
Q4) Explain why the social demand curve for a public good is the vertical sum of the demand curves of each individual.
Page 19
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: Asymmetric Information
Available Study Resources on Quizplus for this Chatper
85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/37620
Sample Questions
Q1) The cost,c,of a college education that serves only as a signal of a high-quality worker is $20,000.The wage of a known high-quality worker,wh,is $75,000.The wage for a known low-quality worker,w ,is $50,000.For what value of the share of the work force that is of high quality,t,is a pooling equilibrium possible?
Q2) A person who generally drives without a seat belt on does not reveal this to his automobile insurance company before he purchases insurance.This is an example of A) adverse selection.
B) moral hazard.
C) signaling.
D) screening.
Q3) If low-quality workers are unable to obtain a college degree,then a separating equilibrium can occur if
A) the cost of obtaining a degree is less than the wage premium paid to those who have obtained the degree.
B) the cost of obtaining a degree is greater than the wage premium paid to those who have obtained the degree.
C) the cost of obtaining a degree is zero.
D) the wage premium paid to those who have obtained the degree is positive.
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Contracts and Moral Hazards
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/37621
Sample Questions
Q1) If information is asymmetric,explain why the hire contract is not efficient in production and a moral hazard exists,but the fixed fee to the principal contract is efficient and does not pose a moral hazard problem.
Q2) Firms that seek to avoid hiring lazy workers that assert they are hardworking are trying to avoid
A) adverse selection.
B) moral hazard.
C) screening.
D) signaling.
Q3) Suppose a plaintiff hires a lawyer to represent her in a court case.Under which of the following contracts is efficiency in risk bearing assured?
A) The lawyer is paid by the hour.
B) The lawyer receives a share of the settlement.
C) The lawyer receives a fixed fee.
D) It is impossible to determine without the degree of risk aversion for each.
Q4) Rents for stores at shopping malls are usually tied to the profits of the store.Comment on how this arrangement affects the mall owner's income versus a fixed rent.
Q5) Explain how more than one possible state of nature affects contract choices.
To view all questions and flashcards with answers, click on the resource link above. Page 21