Econ 121b: Intermediate Microeconomics

Principles of Microeconomics (ECON 1101)

Midterm Examination Solutions ECON 504 - Microeconomics II

Solution The following is a Nash equilibrium: Player 1 calls and the other players do not call. Player 1’s payoff in this action profile is equal to v− c, and is greater than 0, which is the payoff he would get if he deviated and did not call. All the other players get a payoff of v, which is greater than the payoff that they would get if they were to deviate and call: v − c. Therefore, no play...

Midterm Examination I: Solutions ECON 504 - Microeconomics II

Solution We know that a strictly dominated action is played with zero probability in any Nash equilibrium. There are two pure strategy equilibria (M,L), (B,R). There is no equilibrium in which only one of the players completely mix. The only remaining possibility is both of them completely mixing. Let p be player 1’s probability of playing M and q be player 2’s probability of playing L. As we k...

Mathematical Models and Equilibrium in Irreversible Microeconomics

A set of equilibrium states in a system consisting of economic agents, economic reservoirs, and firms is considered. Methods of irreversible microeconomics are used. We show that direct sale/purchase leads to an equilibrium state which depends upon the coefficients of supply/demand functions. To reach the unique equilibrium state it is necessary to add either monetary exchange or an intermediat...

Econ 655Lapan

(a)Verify its properties: Clearly, for “small” P2 only good 1 is produced, for “large” P2 only good 2 is produced, whereas in the intermediate domain both goods are produced. In the two domains of specialization, G is linear (and hence convex and homogeneous of degree one) in price; similarly, in the intermediate domain (where both goods are produced) G is convex and homogeneous of degree one i...