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    Midterm Exam I ECO2145 Microeconomique Theory I: Winter 2020

    Uploaded by

    Maida
    The document outlines instructions for a midterm exam in microeconomic theory. It consists of 6 short answer questions covering topics like monopoly, market segmentation, monopsony, two-part tariffs, and block pricing. Students are instructed to show their work, submit answers individually as PDFs, and are allowed 90 minutes to complete the exam.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Midterm Exam I ECO2145 Microeconomique Theory I: Winter 2020

    Uploaded by

    Maida
    52 views2 pages
    The document outlines instructions for a midterm exam in microeconomic theory. It consists of 6 short answer questions covering topics like monopoly, market segmentation, monopsony, two-part tariffs, and block pricing. Students are instructed to show their work, submit answers individually as PDFs, and are allowed 90 minutes to complete the exam.

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    ECO2145 Midterm

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    The document outlines instructions for a midterm exam in microeconomic theory. It consists of 6 short answer questions covering topics like monopoly, market segmentation, monopsony, two-part tariffs, and block pricing. Students are instructed to show their work, submit answers individually as PDFs, and are allowed 90 minutes to complete the exam.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    52 views2 pages

    Midterm Exam I ECO2145 Microeconomique Theory I: Winter 2020

    Uploaded by

    Maida
    The document outlines instructions for a midterm exam in microeconomic theory. It consists of 6 short answer questions covering topics like monopoly, market segmentation, monopsony, two-part tariffs, and block pricing. Students are instructed to show their work, submit answers individually as PDFs, and are allowed 90 minutes to complete the exam.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Midterm Exam I

    ECO2145
    Microeconomique Theory I

    Winter 2020

    Instructions:

    • The duration of the exam is 90 minutes (60 minutes for the exam + 1/2 hour for uploading)

    • The maximum mark is 33 points.

    • This exam consists of 2 pages (including the cover page and 6 short-answer questions).

    • It is a closed book exam.

    • Programmable calculators are not allowed.

    • Scan and upload your answer to each question as an individual PDF submission to Brightspace
    using the file name convention LASTNAME FIRSTNAME #.pdf where LASTNAME and
    FIRSTNAME refer to your name and # refers to the number of the question. You may limit
    LASTNAME and FIRSTNAME to the first four letters if they are longer than that.

    • Revisions to answers must be uploaded as a new submission with the filename


    LASTNAME FIRSTNAME # X.pdf, where X=B,C,... indicates a revision. The revision
    should include the earlier work you want to keep as well as new work you want to add. Only
    the last submission for a question will be marked.

    • Do not wait until the last minutes to start uploading your files. You should you files as you
    complete a question.

    1
    1. Assume a (one-price) monopolist faces the following inverse demand, Q=400-0.5P, and cost
    structure, C(Q) = 2Q2 .

    (a) Calculate the equilibrium quantity and the consumer surplus. (5 marks)
    (b) If one were to change the problem, and have a non-linear inverse demand curve, but still
    downward sloping, would one still have a deadweight loss? Justify your answer in words
    only. (3 marks)

    2. Assume a market with one firm. The firm can segment the market into three separate markets.
    Assume the demand in markets 1, 2 and 3 are

    P1 = 1000 − 3Q1
    P2 = 2000 − 2Q2
    P3 = 3000 − Q3

    Where P1 and Q1 are the price and output in market 1, respectively. The other quantities (and
    prices) are similarly defined. Finally, the cost structure takes the following form C(Q) = 2Q2
    where Q is total output.
    Set up the profit maximization problem(s)? (4 marks)

    3. Why does the monopsonist face an upward sloping labour supply curve, while a perfectly
    competitive firm faces a horizontal labour supply curve? And why does it matter when
    evaluating the impact of the minimum wage? Answer in words only. (4 marks)

    4. Assume one firm in the industry that can choose both an entrance fee and a price per unit.
    Consumers all have the following demand, p = 200 − 2q. Furthermore, assume that the
    marginal cost of production is $20. Calculate the optimal set of price and output level. (5
    marks)

    5. Evaluate the following statement (4 marks)


    Economic models make unrealistic assumptions and as such, are of limited value when it
    comes to making optimal labour market policies.

    6. Assume only one firm in the industry and that it can carry out bloc pricing (only two blocks).
    Consumers have identical demands which takes the following form, p = 200 − 4q. For the
    sake of simplicity assume that the marginal cost of production is zero (i.e. it does not cost
    anything to produce the good).

    (a) Calculate the optimal set of prices, and output levels. (5 marks)
    (b) How would an increase in the number of blocs affect efficiency and fairness? Answer in
    words only. Justify your answer. (3 marks)

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