Econ 5502 Test

1
ADVANCED MICROECONOMIC ANALYSIS Professor F. S. Lee

(ECON 5502)
Spring 2013
QUANTITATIVE EXAM II
1. Given the following production function y = 2(x1.5)(x2.5) answer the following questions:
a. Derive the marginal product for x1. What direction is it moving?

b. Derive the average product for x1. What direction is it moving?
c. What is the relationship between total output, average product, and marginal product for
x1?
d. Use the function coefficient to determine the returns to scale of the production.
e. Assume x2 = 4, derive the constant output demand function for x1 and the Lagrangian
multiplier function.
f. Assume x2 = 4, derive the short period total cost function in terms of y for prices p1 =
$8.00 and p2 = $7.00.
g. Show that the Lagrangian multiplier function is equal to the marginal cost function.
h. Derive the marginal cost function and determine direction of movement as y increases.
i. Prove that marginal costs increase because the marginal product of x1 declines.
2. A short period perfectly competitive market consists of 40 firms, each with a total cost function
of TC = y2 + y + 9 and the market demand function is ymd = 700 – 8.8py.
a. If the market price is $21.00, how much will the firm produce and what will be its
economic profits?
b. At what market price will the firm make zero economic profits?
c. Derive the firm supply curve.
d. Derive the market supply curve.
e. If the Walrasian auctioneer calls out a market price of $21.00, will the market be in
equilibrium? Why or why not?
f. Determine the market equilibrium price, market equilibrium quantity, how much will
each firm produce and what will be its economic profits.
g. Why does the Walrasian auctioneer procedure produce a stable equilibrium?
OVER
2
3. A perfectly competitive market in the long period and assume that three different firm cost
structures exist:
firm A: TC = y3 - 3y2 + 10y

firm B: TC = y3 - 3y2 + 15y
firm C: TC = y3 - 3y2 + 20y
market demand curve: ym = 490 - 7py
a. Determine the long period equilibrium market price, equilibrium market output, and the
number of firms in the market.
b. If the market demand curve shifted to the right and becomes ym = 810 – 9py what would
be the new long period equilibrium market price, market output, and number of firms in
the market?
c. What are the implications of these results for a competitive long period theory of prices?
3

(ECON 5502)
PRACTICE QUESTIONS FOR IN-CLASS EXAM II
1. Given the following production function y = 4x1x2 –x12 –x22 answer the following questions:
c. Use the function coefficient to determine the returns to scale of the production.
d. Determine the elasticity of substitution for x1.
2. Short Period: given the following production function y = 4x1x2 –x12 –x22 answer the following
questions:
a. Assume x2 = 4, derive the constant output demand function for x1 and the Lagrangian
b. Assume x2 = 4, derive the short period total cost function in terms of y for prices p1 =
$8.00 and p2 = $7.00.
c. Show that the Lagrangian multiplier function is equal to the marginal cost function.
d. Derive the marginal cost function and determine direction of movement as y increases.
e. Prove that marginal costs increase because the marginal product of x1 declines.
f. Show that average variable costs increase as y increases. At what level of output are
marginal costs and average total costs equal? What is the lowest market price and output
would the firm produce?
3. Long Period: given the following production function y = 4x1x2 –x12 –x22 answer the following
questions:
a. Derive the constant output factor input demand functions for x1 and x2. How does x1
behave when y increases? How does x1 behave when p1 decline? How does x1 behave
when p2 declines?
b. Derive the total cost function in terms of y for prices p1 = $8.00 and p2 = $7.00. Is the
cost function a homogeneous and/or homothetic?
c. Derive the average total cost function and determine which laws of returns to
scale determines its shape.
4
4. A perfectly competitive market consists of 60 firms, each with a total cost function of
TC = 10y2 + 80 and the market demand function is ymd = 600 – 7py.
economic profits?
g. What is a false trade. What impact does it have on market equilibrium?
h. Why does the Walrasian auctioneer procedure produce a stable equilibrium?
5. A perfectly competitive market in the long period:
Data
firm A: TC = y3 - 4y2 + 12y

firm B: TC = y3 - 4y2 + 10y
firm C: TC = y3 - 4y2 + 8y
Questions
b. If the market demand curve shifted to the right and becomes 300 – 15py what would be
the new equilibrium market price, market output, and number of firms in the market?
c. Do the results in (a) and (b) support a supply and demand determination of the market
price? Explain.
6. Assume that the total cost curve for a monopolist is given by TC = 3y2 + 800 and it faces
a market demand curve of py = 280 - 4y.
a. Determine the monopolist’s profit maximizing price and quantity and its economic
profits.
b. Determine the price elasticity of demand at the profit maximizing price.
c. Assume that the monopolist’s demand curve has shifted and in the new equilibrium
position the price elasticity of demand is 5 and the profit maximizing quantity produced
is 25, what does this imply about the existence of a firm supply curve under monopoly
and why?
5
7. Given the following production function y = 2(x1.5 + x2.5)2 answer the following questions:
8. Short Period: given the following production function y = 2(x1.5 + x2.5)2 answer the following
questions:
$5.00 and p2 = $6.00.
marginal costs and average variable costs equal. If output was less than this, what would
be the signs of marginal costs and average variable costs? Would this be a feasible level
of output at which the enterprise would produce? Why or why not.
9. Long Period: given the following production function y = 2(x1.5 + x2.5)2 answer the following
questions:
when p2 declines?
6

(ECON 502)
Winter 2010
TAKE HOME EXAM II
DO THE ALL OF THE PROBLEMS
b. Use the function coefficient to determine the returns to scale of the production.
questions:
a. Assume x2 = 9, derive the constant output factor input demand function for x1 and the
Lagrangian multiplier function.
$6.00 and p2 = $5.00.
c. Derive the marginal cost function and determine direction of movement as y increases.
d. Prove that marginal costs increase because the marginal product of x1 declines.
questions:
behave when y increases? How does x1 behave when p1 decline?
b. Derive the total cost function in terms of y for prices p1 = $6.00 and p2 = $5.00.
of TC = y2 + y + 9. The market demand function is ymd = 700 – 8.8py.
economic profits?
7

e. Determine the market equilibrium price, market equilibrium quantity, how much will
each firm produce, and what will be the firm’s economic profits.
5. Assume that three different firm cost structures exist in a competitive market:
Firm cost structure 1: TC = y3 – 3y2 + 10y

a. Given the following cost structures, determine the long period market price.
b. Assume the market demand function is ymd = 490 – 7py, what will the quantity supplied
to the market and how many firms will be in the market?
c. Assume that the market demand curve shifts to ymd = 810 – 9py, what is the new long
period market price and market quantity?
d. What are the implications of these results of a competitive long period theory of prices?
6. Assume that the total cost curve for a imperfectly competitive firm is given by
TC = .5y2 + 15. Also suppose it faces a demand curve of py = 100 - .5y.
a. Determine the firm’s profit maximizing price and quantity and its economic profits.
c. Assume that firm’s demand curve has shifted and has taken the following form:
py = 80 – (1/6)y:
(i) Determine the firm’s new profit maximizing price and quantity.
(ii) What do these results imply about the existence of a firm supply curve under
imperfect competition and why?
8

(ECON 502)
Winter 2008
TAKE HOME EXAM II
questions:
a. Assume x2 = 9, derive the constant output factor input demand function for x1 and the
Lagrangian multiplier function.
$6.00 and p2 = $5.00.
questions:
when p2 declines?
9
economic profits?

py = 80 – (1/6)y:
10

(ECON 502)
Winter 2006
TAKE HOME EXAM II
questions:
$6.00 and p2 = $5.00.
questions:
when p2 declines?
11
economic profits?

py = 80 – (1/6)y:
12

(ECON 502)
Winter 2005
TAKE HOME EXAM II
1. Given the following production function y = 4x1x2 –x12 –x22 answer the following questions:
2. Short Period: given the following production function y = 4x1x2 –x12 –x22 answer the following
questions:
$8.00 and p2 = $7.00.
marginal costs and average total costs equal? What is the lowest market price and output
would the firm produce?
3. Long Period: given the following production function y = 4x1x2 –x12 –x22 answer the following
questions:
when p2 declines?
13
4. A perfectly competitive market consists of 60 firms, each with a total cost function of
TC = 10y2 + 80 and the market demand function is ymd = 600 – 7py.
economic profits?
g. What is a false trade. What impact does it have on market equilibrium?
h. Why does the Walrasian auctioneer procedure produce a stable equilibrium?
5. A perfectly competitive market in the long period:
Data
firm A: TC = y3 - 4y2 + 12y

firm B: TC = y3 - 4y2 + 10y
firm C: TC = y3 - 4y2 + 8y
Questions
b. If the market demand curve shifted to the right and becomes 300 – 15py what would be
the new equilibrium market price, market output, and number of firms in the market?
c. Do the results in (a) and (b) support a supply and demand determination of the market
price? Explain.
6. Assume that the total cost curve for a monopolist is given by TC = 3y2 + 800 and it faces
a market demand curve of py = 280 - 4y.
a. Determine the monopolist’s profit maximizing price and quantity and its economic
profits.
c. Assume that the monopolist’s demand curve has shifted and in the new equilibrium
position the price elasticity of demand is 5 and the profit maximizing quantity produced
is 25, what does this imply about the existence of a firm supply curve under monopoly
and why?
14

(ECON 502)
Winter 2004
TAKE HOME EXAM II
questions:
$5.00 and p2 = $6.00.
questions:
when p2 declines?
15
4. For the total cost function TC = y[p1 + p2], derive the constant output factor input demand
functions and the production function.
economic profits?

py = 80 – (1/6)y:
16

(ECON 5502)
Spring 2013
IN-CLASS EXAM I
Answer ONE Question From Each of the Following Four Sections
I. Answer ONE Question
1. What role does deduction play in Marshall and in modern neoclassical theorizing?
2. How is Lionel Robbin’s definition of neoclassical economics reflected in the methodology of

modern neoclassical economics?
3. Optimizing choice against a constraint is the underlying mathematical procedures used in

neoclassical demand theory. Why? What problems would arise if “optimizing” and “choice” are
socially constructed?
II. Answer ONE Question
4. Civilized wants and socially created preferences create theoretical problems for neoclassical
demand theory. How? And what are the implications?
5. Neoclassical consumer demand theory tells a story about consumer choice. What is the
theoretical qua ideological point of the story?
6. What are the objectives of the theory of revealed preference? Does it successfully meet the
objectives? Discuss.
III. Answer ONE Question
7. Modern production and cost theory says that short period marginal cost curves slope
upward and long period average total cost curves are U-shape; however, empirical evidence
seems to show otherwise. Is the theory daft, evidence wrong, or economists have no idea what
they are doing? Explain.
8. How do factor input demand functions violate the ceteris paribus assumption? What does this
imply about the neoclassical theory of costs?
9. Critically evaluate and compare Marshall’s internal and external economies and the modern
production concept of returns to scale. Are they comparable? What are their purposes? Are
they successful at what they are supposed to do?
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IV. Answer ONE Question
10. The use of mathematics and economic models in neoclassical economics is due to its
methodological position that theories need not be realistic or explanatory but only be able to
predict correctly. Discuss.
11. Under what conditions can individual consumer demand curves be aggregated to give a market
demand curve that would behave as if it represented the decisions of a single maximizing
consumer. What does this imply about the generality of neoclassical demand theory?
12. Designed to answer a particular set of questions, neoclassical theory of production abstracts from
much of the descriptive detail of the process of production. What is one of the questions chosen
and why do neoclassical economists want to answer it the way they do?
18

(ECON 5502)
Spring 2012
IN-CLASS EXAM I
Answer ONE Question From Each of the Following Four Sections
I. Answer ONE Question


II. Answer ONE Question
III. Answer ONE Question
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IV. Answer ONE Question
20

(ECON 5502)
PRACTICE QUESTIONS FOR IN-CLASS EXAM I

6. What is duality in consumer demand theory? Does it involve a creation of knowledge? Discuss.
8. Without marginal utility there is no functional relationship between price and demand. Discuss.

11. What role does methodological individualism play in neoclassical theorizing?
13. Why is it important for neoclassical production and cost theory that declining marginal products
be an inherent technical relationship in production? Is it in fact possible to make declining
marginal products a technical relationship? Discuss.
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14. What is the envelope theorem and what theoretical story does it attempt to tell? Critically
evaluate this story.
15. Why will production not take place in stage one of production?
16. Under what condition would a production function not generate a marginal product? And what
impact would this have for the relationship between output and costs?
17. Why is it problematical to assume that technology which is socially constructed is appropriate
for neoclassical theorizing?
18. What is the difference between real cost of production and expenses of production? Why does
Marshall believe it is important to make such a distinction?
19. Marshall utilized the homogeneous concepts of land, labor, and capital in his analysis of
production; but modern production theory made no attempt to do the same thing. Why?
21. In consumer theory, the slope of an individual's demand curve for a good is
indeterminate. In production theory, the slope of a competitive firm's demand curve for an input
is determinant. Explain.
22. Discuss the problems that emerge when trying to make the law of diminishing returns a
technical relationship.
22

(ECON 5502)
Spring 2010
IN-CLASS EXAM I
Do FOUR of the Following Questions.
1. Neoclassical economics represents a new basis for explaining prices. What was the old basis?
What is different about the new basis?


23

(ECON 502)
Winter 2008
IN-CLASS EXAM I


24

(ECON 502)
Winter 2006
IN-CLASS EXAM I


25

(ECON 502)
Winter 2005
IN-CLASS EXAM I
2. Income is troubling to both Marshall’s demand theory and modern demand theory. Why? What
does this imply about the generality of neoclassical demand theory?

8. Without marginal utility there is function relationship between price and demand. Explain.
26

(ECON 502)
Winter 2004
IN-CLASS EXAM I
A. Do TWO of the Following Questions.
2. Income is troubling to both Marshall’s demand theory and modern demand theory. Why? What
does this imply about the generality of neoclassical demand theory?
they successful at what they are suppose to do?
5. Why is important for neoclassical production and cost theory that declining marginal products be
an inherent technical relationship in production? Is it in fact possible to make declining marginal
products a technical relationship? Discuss.
B. Do TWO of the Following Questions.

neoclassical demand and cost theory. Why? What problems would arise if “optimizing” and
“choice” are socially constructed?
much of the descriptive detail of the process of production. Choose one of the questions and
discuss why neoclassical economists want to answer it the way they do? What, if any, are the
shortcomings of the answer?
8. What is the theoretical role of relative scarcity in neoclassical demand and cost and production
theory?
9. Marshall distinguished between real cost of production and expenses of production. Why? Is
there such as distinction in modern cost theory? Why or why not?
27

(ECON 5502)
Spring 2013
TAKE HOME PROBLEM I
Consider a consumer with the following utility function U = [(y1).5 + (y2).5]2
a. derive the marginal utility of y1 and y2.

b. does this utility function conform to the law of diminishing marginal utility?
Explain.
c. show the conditions for consumer equilibrium.
d. from the 1st order conditions derive the demand functions for y1 and y2. Also
derive λe.
e. using the demand functions, λe, and the 1st order conditions, derive the Slutsky
equation for ∂ye1/∂p1 and identify which terms are the substitution effect and which are
the income effect.
f. identify λe, determine the sign of ∂λe/∂p1, and interpret the results.
g. derive the income elasticity of demand for ye1 and determined whether it is a
normal, superior or inferior good.
h. derive the Engle curve associated with the utility function and graph it.
i. using the above results, answer the following questions about substitutes and
complements:
(1) what is the difference between gross and net substitutes and complements?
(2) what is the sign of ∂ye2/∂p1?
j. derive the price elasticity of demand for ye1.
28

(ECON 502)
Spring 2013
TAKE-HOME PROBLEM II
1. Given the Short Period and the following production function y = 2(x1.5 + x2.5)2 answer the
following questions:
d. Assume x2 = 16, derive the constant output demand function for x1 and the Lagrangian
e. Assume x2 = 16, derive the short period total cost function in terms of y for prices p1 =
$5.00 and p2 = $6.00.
f. Derive the marginal cost function and determine direction of movement as y increases.
g. Prove that marginal costs increase because the marginal product of x1 declines.
29

(ECON 502)
Spring 2013
TAKE-HOME PROBLEM III
py = 80 – (1/6)y:
2. Assume the firm to be a dominant firm and has the following cost structure: TC = 20 + 10y + y2;
also assume that the market demand curve is py = 75 – 5y and that the marginal cost curve of the
fringe firm is MC = 3y:
a. Derive the dominant firm’s demand curve.

b. Determine the dominate firm’s profit maximizing price and quantity.
c. Determine the profit maximizing quantity supplied by the fringe firm.
3. Assume that the firm has the following cost structure: TC = 20 + 10y + y2 and faces the
following kinked demand curve
dd curve: py = 46 – y
DD curve: py = 73 – 10y
a. Graph the kinked demand curve and its marginal revenue curve.
b. Determine the firm’s equilibrium price and quantity.
c. Show that marginal cost does not equal marginal revenue in equilibrium.
30

(ECON 502)
Spring 2013
QUANTITATIVE EXAM I
Theory of Consumer Behavior and Demand
DO ALL OF THE PROBLEMS
1. Consider a consumer with the following utility function U = (y1)1/2(y2)1/2
a. derive the marginal utility of y1 and determine its direction of movement.

b. derive the 1st order conditions and show the conditions for consumer equilibrium.
c. from the 1st order conditions derive the demand functions for y1 and y2.
d. derive the Engle curve associated with ye1.
e. derive the income elasticity of demand for ye1 and determined whether it is a normal,
superior or inferior good.
f. derive the price elasticity of demand for ye1.
g. derive the Slutsky equation for ∂ye1/∂p1 and determine its sign, and identify and
determine the substitution effect and the income effect.
h. derive the income-consumption path associated with the utility function.
i. using the above results, determine the cross effect for ye1.
j. using the above results, derive the indirect utility function and then use Roy’s
identity to derive the demand function for ye2.
k. is the utility function a homogeneous utility function? Demonstrate.
l. is the utility function a homothetic utility function? What happens to utility when y1 and
y2 are doubled?
31

(ECON 502)
Winter 2012
QUANTITATIVE EXAM I
1. Consider a consumer with the following utility function U = 2(y1).5 + 4(y2).5
a. derive the marginal utility of y1 and determine its direction of movement.

b. derive the 1st order conditions and show the conditions for consumer equilibrium.
c. from the 1st order conditions derive the demand functions for y1 and y2. Also
derive λe.
d. derive the Engle curve associated with ye1.
e. derive the income elasticity of demand for ye1 and determined whether it is a normal,
superior or inferior good.
f. derive the price elasticity of demand for ye1.
g. using the demand functions, λe, and the 1st order conditions, derive the Slutsky
the income effect.
h. derive the income-consumption path associated with the utility function.
i. using the above results, determine the cross effect for ye1.
k. Is it a homogeneous utility function?
l. Is it a homothetic utility function? What happens to utility when y1 and y2 are doubled?
32

(ECON 502)
Winter 2010
TAKE HOME EXAM I
1. Consider a consumer with the following utility function U = 2(y1).5 + 4(y2).5

Explain.
c. derive the 1st order conditions and show the conditions for consumer equilibrium.
derive λe.
e. Can y1e be expressed as a linear function of income?
f. using the demand functions, λe, and the 1st order conditions, derive the Slutsky
the income effect.
g. identify λe, determine the sign of ∂λe/∂p1, and interpret the results.
h. derive the compensated demand functions for y1 and y2 and determine the sign for
∂yu1/∂p1 and ∂yu2/∂p2.
i. derive the income elasticity of demand for ye1 and ye2 and determined whether they
are normal, superior or inferior goods.
j. derive the Engle curve associated with the utility function and graph it.
k. derive the income-consumption path associated with the utility function and graph it.
l. using the above results, answer the following questions about substitutes and
complements:
(2) what are the signs of ∂ye2/∂p1 and ∂yu2/∂p1? Are they different? If so, why?
(3) under what conditions can a good be a net substitute and a gross
complement?
m. using the above results, derive the indirect utility function and then use Roy’s
n. derive the price elasticity of demand for ye1 and ye2 and for yu1 and yu2. Why are they
different?
o. assume that ∂λe/∂p1 = 0, derive y1e and ∂ye/∂p1. Why does y1e slope downward?
p. Is it a homogeneous utility function?
q. Is it a homothetic utility function? What happens to utility when y1 and y2 are doubled?
r. Derive the cost function and determine what happens to utility when money income is
doubled.
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2. Revealed Preference
a. When prices are (p1, p2) = (3,3) and consumer demands (y1, y2) = (7,4), when prices
are (p1*, p2*) = (4,2) and consumer demands (y1*, y2*) = (6,6), and when prices
are (p1**, p2**) = (5,1) and consumer demands (y1**, y2**) = (7,3). Is this behavior
consistent with consumer maximizing behavior? Why or why not?
b. When prices are (p1, p2) = (1,1) and consumer demands (y1, y2) = (2,3), when prices
34

(ECON 502)
Winter 2008
TAKE HOME EXAM I
1. Consider a consumer with the following utility function U = [(y1).5 + (y2).5]2

Explain.
derive λe.
the income effect.
complements:
complement?
different?
o. Is it a homogeneous utility function?
p. Is it a homothetic utility function? What happens to utility when y1 and y2 are doubled?
q. Derive the cost function and determine what happens to utility when money income is
doubled.
35
a. Let p = (p1, p2) and y = (y1, y2). Separately for parts (1) to (4), state whether these
indicate choices that satisfy the weak axiom of revealed preference.
(1) p0 = (1, 3), y0 = (4, 2); p1 = (3, 5), y1 = (3, 1)
(2) p0 = (1, 6), y0 = (10, 5); p1 = (3, 5), y1 = (8, 4)
(3) p0 = (1, 2), y0 = (3, 1); p1 = (2, 2), y1 = (1, 2)
(4) p0 = (2, 6), y0 = (20, 10); p1 = (3, 5), y1 = (18, 4)
b. Let p = (p1, p2, p3) and y = (y1, y2, y3). Does the data below satisfy the weak axiom of
revealed preference? Does the data below satisfy the strong axiom of revealed
preference? Explain.
p0 = (1, 1, 2), y0 = (5, 19, 9); p1 = (1, 1, 1), y1 = (12, 12, 12); p2 = (1, 2, 1), y2 = (27, 11,
1)
36

(ECON 502)
Winter 2006
TAKE HOME EXAM I
1. Consider a consumer with the following utility function U = [(y1).5 + (y2).5]2

Explain.
derive λe.
the income effect.
complements:
complement?
different?
o. Is it a homogeneous utility function?
p. Is it a homothetic utility function? What happens to utility when y1 and y2 are doubled?
q. Derive the cost function and determine what happens to utility when money income is
doubled.
37
c. Let p = (p1, p2) and y = (y1, y2). Separately for parts (1) to (4), state whether these
indicate choices that satisfy the weak axiom of revealed preference.
(1) p0 = (1, 3), y0 = (4, 2); p1 = (3, 5), y1 = (3, 1)
(2) p0 = (1, 6), y0 = (10, 5); p1 = (3, 5), y1 = (8, 4)
(3) p0 = (1, 2), y0 = (3, 1); p1 = (2, 2), y1 = (1, 2)
(4) p0 = (2, 6), y0 = (20, 10); p1 = (3, 5), y1 = (18, 4)
d. Let p = (p1, p2, p3) and y = (y1, y2, y3). Does the data below satisfy the weak axiom of
revealed preference? Does the data below satisfy the strong axiom of revealed
preference? Explain.
p0 = (1, 1, 2), y0 = (5, 19, 9); p1 = (1, 1, 1), y1 = (12, 12, 12); p2 = (1, 2, 1), y2 = (27, 11,
1)
38

(ECON 502)
Winter 2005
TAKE HOME EXAM I
1. Consider a consumer with the following utility function U = 2(y1).5 + 4(y2).5.

Explain.
derive λe.
the income effect.
f. identify and determine the sign of ∂λe/∂p1.
g. derive the compensated demand functions for y1 and y2 and determine the sign for
h. derive the income elasticity of demand for ye1 and ye2 and determined whether they
complements:
(2) what are the signs of ∂ye2/∂p1 and ∂ys2/∂p1? Are they different? If so, why?
complement?
k. derive the price elasticity of demand for ye1 and ye2 and for yu1 and yu2. Why are they
different?
l. assume that ∂λe/∂p1 = 0, derive y1e and ∂ye1/∂p1. Why does y1e slope downward?
a. When prices are (p1, p2) = (3,3) and consumer demands (y1, y2) = (7,4), when prices
b. When prices are (p1, p2) = (1,1) and consumer demands (y1, y2) = (2,3), when prices
39
3. Given the following utility function: U = 4y1y2 + 17 answer the following questions:
a. Is it a homogeneous utility function?

b. Is it a homothetic utility function? What happens to utility when y1 and y2 are doubled?
c. Derive the demand curve for y1 associated with the utility function. Can y1e be expressed
as a linear function of income?
d. Derive the Engle curve associated with the utility function and graph it.
e. Derive the income-consumption path associated with the utility function and graph it.
f. Derive the income elasticity of demand?
g. Derive the cost function and determine what happens to utility when money income is
doubled.
40

(ECON 502)
Winter 2004
TAKE HOME EXAM I
1. Consider a consumer with the following utility function U = (y1).5(y2)2.

Explain.
derive λe.
the income effect.
complements:
complement?
theorem to derive the demand function for ye2.
k. derive the price elasticity of demand for ye1 and ye2 and for yu1 and yu2. Why are they
different?
a. When prices are (p1, p2) = (1,2) and consumer demands (y1, y2) = (1,2), and when prices
are (p1*, p2*) = (2, 1) and consumer demands (y1*, y2*) = (2,1). Is this behavior consistent
with consumer maximizing behavior? Why or why not?
b. When prices are (p1, p2) = (2,1) and consumer demands (y1, y2) = (1,2), and when prices
are (p1*, p2*) = (1,2) and consumer demands (y1*, y2*) = (2,1). Is this behavior consistent
with consumer maximizing behavior? Why or why not?
41
3. Given the following utility function: U = y1y2 answer the following questions:
a. Is it a homogeneous utility function?

b. Is it a homothetic utility function? What happens to utility when y1 and y2 are doubled?
c. Derive the demand curve for y1 associated with the utility function. Can y1e be expressed
as a linear function of income?
d. Derive the Engle curve associated with the utility function and graph it.
e. Derive the income-consumption path associated with the utility function and graph it.
f. Derive the income elasticity of demand?
g. Derive the cost function and determine what happens to utility when money income is
doubled.
42
ADVANCED BMICROECONOMIC ANALYSIS Professor F. S. Lee

ECON 502
Winter 2003
EXAM I
Historical background, Methodology, and Demand
1. Consider a consumer with the following utility function U = y11/2y21/2 (45 minutes)
a. Derive the equilibrium demand functions for y1 and y2.
b. Derive the Slutsky equation for ∂y1e/∂p1, identify which terms are the
substitution effect and which are the income effect, determine the signs for the
substitution and income effects, and determine the sign of ∂y1e/∂p1.
c. Derive the indirect utility function and from it derive y1e.
d. Derive the compensated demand functions for y1 and y2.
e. What is the sign of ∂y2u/∂p1? Is it a net substitute, complement, or

independent?
f. Is the utility function a homogeneous function? Is it a homothetic function?
2. Do ONE of the following questions. (10 minutes)
a. What is the importance of duality for neoclassical demand theory?
b. State the weak and strong axioms of revealed preference. How are these axioms related
to the consumer’s budget constrained utility maximization problem?
c. Separable utility functions weaken the substitution effect. Why?
a. If preferences are socially created, can a demand curve exist? Discuss
b. Under what conditions can the individual consumer demand curves be

aggregated to give a market demand curve that behaves as if it represents the decisions of
a single consumer. What does this imply about the generality of neoclassical demand
theory?
c. What was Thornton’s Critique of Supply and Demand?

43
a. Neoclassical economics represents a new basis for explaining prices. What was the old
basis? What is different about the new basis?
b. The methodology used in neoclassical economics ensures that its theories are empirically
grounded. Discuss.
c. Income is troubling to both Marshall’s demand theory and modern demand theory. Why?
44

(ECON 502)
Winter 2002
EXAM I
Methodology and Consumer Behavior and Demand
1. Consider a consumer with the following utility function U = (y1)(y2)2.
a. Does this utility function conform to the law of diminishing marginal utility?
Explain.
b. Show the conditions for consumer equilibrium.
c. Derive the demand functions for y1 and y2.
d. If M = $20.00, p1 = $3.00 and p2 = $2.00, determine y1e and y2e.
e. Derive the Slutsky equation for ∂ye1/∂p1, identify which terms are the substitution effect
and which are the income effect, determine the signs for the substitution and income
effects, and determine the sign of ∂y1e/∂p1.
f. Derive the income elasticity of demand for ye1 determined whether it is a normal or an
inferior good.
g. Using the above results, answer the following questions about substitutes and
complements:
(2) what is the sign of ∂ye2/∂p1?
h. Derive the price elasticity of demand for ye1.
2. Do ONE of the following questions.
a. How is Lionel Robbin’s definition of neoclassical economics reflected in the

methodology of modern neoclassical economics?
b. What is the importance of the relationship between wants and economics for Marshall’s
analysis of demand?
c. What is the importance of duality for neoclassical demand theory?
a. Marshall’s analysis of demand is not troubled by the Giffen good paradox while modern
demand theory is. Why?
b. What does lexiographic preference ordering imply about the existence of the utility
function?
c. How is utility maximization ensured in modern consumer theory?
45
a. Under what conditions can the individual consumer demand curves be aggregated to give
a market demand curve that would behave as if it represented the decisions of a single
maximizing consumer. What does this imply about the generality of neoclassical demand
theory?
b. Neoclassical theory of consumer behavior and demand has a number of theoretical
problems. Examine one of them.
c. Is modern theory of consumer behavior and demand an advance over Marshall? Discuss.
46

(ECON 502)
Winter 2001
EXAM I
1. Consider a consumer with the following utility function U = (y1).5(y2)2.

Explain.
derive λe.
the income effect.
∂ys1/∂p1 and ∂ys2/∂p2.
complements:
complement?
theorem to derive the demand function for ye2.
k. derive the price elasticity of demand for ye1 and ye2 and for ys1 and ys2. Why are they
different?
2. Under what conditions can the individual consumer demand curves be aggregated to give
a market demand curve that would behave as if it represented the decisions of a single
maximizing consumer. What does this imply about the generality of neoclassical demand
theory?
3. The income effect has negative implications for Marshall’s theory of demand and for
modern demand theory. What are these negative implications and how did Marshall and modern
neoclassical economists deal with them?
47
4. Marshall remarked that the higher study of consumption must come after, and not before,
the main body of economic analysis. Discuss whether the higher study of consumption can
actually take place within neoclassical demand theory.
5. The microeconomic theory of consumer behavior hinges on the concept of subjective

individual preference. Individual preferences are either (a) unobservable or (b) observable.
Furthermore, individual preferences are either (A) exogenous or (B) endogenous. Consider the
b-B pair of assumptions. What are some theoretical implications as microeconomists go about
constructing their theory of individual consumer behavior?
6. What is the importance of duality to neoclassical demand theory?

48

(ECON 502)
Winter 2003
EXAM II
Theory of Production and Costs
PART I: DO THE ALL OF THE PROBLEMS
1. Given the following production function y = 4(x1.5)(x2) answer the following questions:
b. What is the relationship between total output, average product, and marginal product?
c. What is the returns to scale of the production function?
2. Given the following production function y = 4(x1.5)(x2) answer the following questions:
a. Assume x2 = 10, derive the factor input demand function for x1 and the Lagrangian
b. Derive the short period total cost function in terms of y for prices p1 = $3.00 and p2 =
$5.00.
e. Show that average variable costs increase as y increases.
f. At what level of output and costs are marginal costs and average total costs equal?
3. What is the relationship between the function coefficient, long period average total costs, and
long period marginal costs?
4. Given the following total cost function: TC = 2yp1.5p2.5:
a. Derive x1e, the factor input demand function for x1.
b. Derive x2e, the factor input demand function for x2.
c. How does x1e react when its own price is reduced?

49
d. Are x1e and x2e complements or substitutes?
e. Is x1e a normal or inferior factor input?
f. Derive the production function from the total cost function.
PART II: DO THREE OF THE FOLLOWING QUESTIONS
6. Why will production not take place in stage one of production?
7. Under what condition would a production function not generate a marginal product? And what
impact would this have for the relationship between output and costs?
8. Why is it problematical to assume that technology which is socially constructed is appropriate

for neoclassical theorizing?
production; but modern production theory made no attempt to do the same thing. Why?
Extra credit: Why did Jacob Viner get upset with his draftsman and why did Keynes consider the
draftsman the second smartest economist in the United States?
50

(ECON 502)
Winter 2002
EXAM II
1. Given the following production function y = 4x1.5 + 2x2.5 answer the following questions:
b. What is the relationship between total output, average product, and marginal product?
c. What is the returns to scale of the production function?
2. Given the following production function y = 4x1.5 + 2x2.5 answer the following questions:
b. Derive the short period total cost function in terms of y for prices p1 = $5.00 and p2 =
$3.00.
e. Show that average variable costs increase as y increases. At what level of output are
marginal costs and average variable costs equal.
f. What is the relationship between the function coefficient and long period average total
costs and long period marginal costs?
51
and why do neoclassical economists want to answer it they way they do?
5. Why is the duality of cost and production functions important for neoclassical economics?
7. Marshall linked specialized instrumental capital and specialization of labor to the scale of
production. What problem did this cause him when discussing the law of increasing returns?
8. What did Marshall mean by internal economies and external economies? Are they adequately
captured in modern production concept of returns to scale? Why or why not.
9. Extra Credit: Who said what about beer that was critical of marginal products?
52

(ECON 502)
Winter 2001
EXAM II
1. Given the following production function y = x1 + 4x2 + 4x1.5x2.5 answer the following questions:
c. What is its function coefficient and returns to scale?
d. Extra Credit: Determine the elasticity of substitution for x1.
2. Given the following production function y = (x1.5 + 2x2.5)2 answer the following questions:
$4.00 and p2 = $5.00.
f. Extra Credit: Show that average variable costs increase as y increases. At what level of
output are marginal costs and average variable costs equal. If output was less than this,
what would be the signs of marginal costs and average variable costs? Would this be a
feasible level of output at which the enterprise would produce? Why or why not.
53
and why do neoclassical economists want to answer it they way they do?
4. Discuss one of the problems that emerge when trying to make the law of diminishing returns a
technical relationship.
produce; but modern production theory made no attempt to do the same thing. Why is this so?
6. Marshall linked specialized instrumental capital and specialization of labor to the scale of
production. What problem did this cause him when discussing the law of increasing returns?
7. What did Marshall mean by internal economies and external economies? Are they adequately
captured in modern production concept of returns to scale? Why or why not.
8. Extra Credit: Who did Keynes say was the second smartest economist in the United States and
why?
54

(ECON 5502) Spring 2013
FINAL EXAM
DO THREE OF THE FOLLOWING QUESTIONS
1. What impact does the absence of the supply curve outside of perfect competition have on the
price mechanism for the allocation of scarce resources in a laissez-faire economy?
2. Discuss the following statement: marginalism is not designed to serve to explain and
predict the behavior of real firms; instead, it is designed to explain and predict changes in
observed prices as effects of particular changes in conditions. In this causal connection the firm
is only a theoretical link, a mental construct helping to explain how one gets from the cause to
the effect. This is altogether different from explaining the behavior of a firm.
3. Under what conditions can imperfect competition explain stable prices? Is this explanation
general enough to account for the existence of stable prices in the real world?
4. What is the representative firm? How did Marshall use it to reconcile increasing returns to scale
and competitive conditions in his long period theory of prices?
5. Delineate and compare Cournot’s duopoly model, Chamberlin’s duopoly model, and Hall and
Hitch’s kinked demand curve model. Which model seems to explain ‘competition among the
few’ the best? Explain your answer.
6. In what respects is general equilibrium analysis superior to partial equilibrium analysis? Why,
then, is partial equilibrium analyses so common within microeconomics?
7. When dealing with long period equilibrium under perfect competition, the combination of firms
with increasing average total costs and free entry creates rather paradoxical results. What are the
paradoxical results? How do neoclassical economists try to get around the results? And are they
successful?
8. “It always pays firms to form a cartel; but once formed the cartel is formed, it always pays
individual firms to cheat on the output quotes or the cartel market price.” Under what conditions
are either or both parts of the statement true?
55

PRACTICE QUESTIONS FOR FINAL EXAM
1. Marshall’s concept of free competition is realistic but logically flawed; on the other hand, the
modern concept of perfect competition is logically consistent but unrealistic. Discuss.
2. Under imperfect-monopolistic competition as well as in Marshall’ theory of prices,

heterogeneous firms make the existence of market equilibrium implausible. Why? How did
Marshall, Robinson, and Chamberlin overcome this problem? Evaluate their solutions.
5. Firm demand curves become problematical under conditions of imperfect-oligopolistic

competition where firm interdependency exists. How did economists overcome this problem so
as to be able to construct theoretical models and analysis of imperfect-oligopolistic competition?
7. For a long period market equilibrium and theory of prices under perfectly competitive conditions
to ‘work’, the firm must have a U-shaped ATC curve. Why? Discuss the theoretical issues
concerning the existence of such a cost curve and associated supply curve.
8. Consider the following quote by P. Sraffa from the “Increasing Returns and the Representative
Firm” Symposium:
I am trying to find what are the assumptions implicit in Marshall’s theory; if Mr.
Robertson regards them as extremely unreal, I sympathise with him. We seem to be
agreed that the theory cannot be interpreted in a way which makes it logically self-
consistent and, at the same time reconciles it with the facts it sets out to explain. Mr.
Robertson’s remedy is to discard mathematics, and he suggests that my remedy is to
discard the facts; perhaps I ought to have explained that, in the circumstances, I think it is
Marshall’s theory that should be discarded.
Why does Sraffa suggests that Marshall’s theory should be discarded?
56
10. Are Bain's barriers to entry really barriers to existing large industrial corporations? Explain.
12. Describe the Walrasian procedure for the determination of the short period market price and
output and explain why this procedure produces a stable equilibrium. Contrast your answer to
Marshall’s approach for determining market price and output. Which explanation is more
theoretically coherent? Why?
13. To what degree does general equilibrium fulfill the following definition of economics:
“Economics is the science which studies human behavior as a relationship between ends
and scarce means which have alternative uses.”
15. What are the two principle explanations of how the market price is determined in perfect
competition? Why are they utilized?
successful?
17. The full cost prices described by Hall and Hitch in “Price Theory and Business Behavior” are not
set by equating marginal cost to marginal revenue. What implications does this have for
neoclassical price theory?
18. “It has to be recognized that a general abandonment of the assumption of perfect competition, a
universal adoption of the assumption of monopoly, must have very destructive consequences for
economic theory” (Hicks, Value and Capital). Discuss.
19. “It always pays firms to form a cartel; but once formed the cartel is formed, it always pays
individual firms to cheat on the output quotes or the cartel market price.” Under what conditions
are either or both parts of the statement true?
20. As graduate students, economists are presented with many different theories of the firm.
However, contrary to what is taught in demand theory, economists do not accept the axioms of
continuity or transitivity when it comes to their preference ordering of alternative theories.
Rather they prefer an ordering of theories--one theory must be `right' and the rest wrong to a
lesser or greater extent. Assuming you are such an economist investigating a firm in an
57
oligopolistic industry, what data would you need to collect and how would you use it to
differentiate and rank the following theories of the firm: Baumol's sales maximizing theory of
the firm, Williamson's managerial discretion theory of the firm, and Cyert and March's
behavioral theory of the firm?
21. Comment on the following statement:
The unique view implicit in neoclassical general equilibrium theory is that, by taking resources
and technology given, individual consumption choices can be regarded as determining all the
important variables--factor allocations, prices, incomes, and the supply of goods.
58

FINAL EXAM
DO THREE OF THE FOLLOWING QUESTIONS


Firm” Symposium:

59

FINAL EXAM
DO FOUR OF THE FOLLOWING QUESTIONS


10. Are Bain's barriers to entry really barriers to existing large industrial corporations? Explain.
60

(ECON 502)
Winter 2008
FINAL EXAM


61

(ECON 502)
Winter 2006
FINAL EXAM


as to be able to construct theoretical models and analysis of imperfect-oligopolistic competition.
62

(ECON 502)
Winter 2005
FINAL EXAM
Firm” Symposium:
Why does Sraffa suggest that Marshall’s theory should be discarded?
Marsahll’s approach for determining market price and output. Which explanation is more

63

64

(ECON 502)
Winter 2004
FINAL EXAM
Firm” Symposium:
Marsahll’s approach for determining market price and output. Which explanation is more


65
9. To what degree does general equilibrium fulfill the following definition of economics:
“Economics is the science which studies human behavior as a relationship between ends
and scarce means which have alternative uses.”
much of the descriptive detail of the process of production. Choose one of the questions and
discuss why neoclassical economists want to answer it the way they do? What, if any, are the
shortcomings of the answer?
8. What is the theoretical role of relative scarcity in neoclassical demand and cost and production
theory?
9. Marshall distinguished between real cost of production and expenses of production. Why? Is
there such as distinction in modern cost theory? Why or why not?
66

(ECON 502)
Winter 2003
FINAL EXAM
Price Theory: Perfect and Imperfect Competition
PART I: DO ALL OF THE PROBLEMS (40 minutes)
of TC = 10y2 + 80. The market demand function is ymd = 600 – 7py.
a. If the market price is $80.00, how much will the individual firm produce and what will be
its economic profits?
b. Derive the market supply curve.
c. Determine the market equilibrium price, market equilibrium quantity, how much will
2. Assume that a perfectly competitive firm has the following long period total cost curve:
TC = 500y – 5y2.
a. For a given market price, py = $11.21, prove that the enterprise will not produce where
marginal cost equals the market price.
b. Why is it not possible to derive a supply curve for the firm in this situation?
TC = 3y2 + 800. Also suppose it faces a demand curve of py = 280 - 4y.
b. Assume that firm’s demand curve has shifted and in the new equilibrium position the
price elasticity of demand is 5 and the profit maximizing quantity produced is 25, what
does this imply about the existence of a firm supply curve under imperfect competition
and why?
4. Assume that the firm has the following total cost curve and faces the following kinked demand
curve:
TC = 2y2 + 6y + 10
dd curve: py = 60 -2y
DD curve: py = 120 – 12y
a. determine the firm’s equilibrium price and quantity and show that marginal costs does
not equal marginal revenue.
b. What implications does this have for neoclassical price theory?
67
PART II: DO TWO OF THE FOLLOWING QUESTIONS (40 minutes)
1. Describe Marshall’s representative firm and explain its role in his theory of prices.
Firm” Symposium:
4. Under imperfect/monopolistic competition as well as in Marshall’s theory of prices,

heterogenous firms make the existence of market equilibrium implausible. Why? How did
PART III: DO TWO OF THE FOLLOWING QUESTIONS (40 minutes)
2. What are the two principle explanations of how the market price is determined in perfect
competition? Why are they utilized?
successful?
4. Why are firm demand curves problematical under conditions of imperfect-oligopolistic

competition where firm interdependency exists? How did economists overcome this problem so
68

(ECON 502)
Winter 2002
FINAL EXAM
PART I: DO ALL OF THE PROBLEMS (40 minutes)
of TC = 7y2 + 63. The market demand function is ymd = 420 – 7py.
economic profits?
2. Assume that three different firm cost structures exist in a competitive market and that the
minimum ATC for each cost structure occurs when output is equal to 3:
Firm cost structure 1: ATC = y2 – 3y + 10

TC = 2y2 + 25. Also suppose it faces a demand curve of py = 160 - 2y.
c. Assume that firm’s demand curve has shifted and in the new equilibrium position the
price elasticity of demand is 6 and the profit maximizing quantity produced is 25, what
dose imply about the existence of a firm supply curve under imperfect competition and
why?
OVER
69
PART II: DO FOUR OF THE FOLLOWING QUESTIONS (80 minutes)
1. How did Marshall reconcile increasing returns to scale and competitive conditions in his long
period theory of prices?
2. In his article “On the Relation Between Cost and Quantity Produced,” Sraffa argued that free
competition must be abandoned if one wanted a demand and cost (supply) based long period
theory of prices. Why?
3. Critically evaluate the following statement:
Assume that the output of a competitive market increases and as a result its input prices
increase, then the outcome will be an increasing market supply curve. Consequently it is
now possible for supply and demand to jointly determine the market price and quantity.

competition where firm interdependency exists. How did economists, such as Joan Robinson,
Edward Chamberlin, Robert Hall-Charles Hitch, and others, overcome this problem so as to be
able to construct theoretical models and analysis of imperfect-oligopolistic competition.
6. The full cost prices described by Hall and Hitch in “Price Theory and Business Behavior” are not
set by equating marginal cost to marginal revenue. What implications does this have for
neoclassical price theory?
70

(ECON 502)
Winter 2001
FINAL EXAM
PART I: DO THE ALL OF THE PROBLEMS (40 minutes)
of TC = 4y2 + 8. The market demand function is ymd = 320 – 6p.
economic profits?
b. Derive the market supply curve.
c. If the Walrasian auctioneer calls out a market price of $32.00, will the market be in
d. Determine the market equilibrium price and quantity.
2. Assume that a perfectly competitive firm has the following long period total cost curve:
TC = 100y – 4y2.
a. If the market price is $12.00, how much will the firm produce and what will its economic
profits?
b. Why is it not possible to derive a supply curve for the firm in this situation?
TC = .5y2 + 15. Also suppose it faces a demand curve of p = 100 - .5y.
p = 80 – (1/6)y:
OVER
71
PART II: DO FOUR OF THE FOLLOWING QUESTIONS (120 minutes)
1. Describe Marshall’s representative firm and explain its role in his theory of prices.
2. What was Sraffa’s critique of Marshall’s theory of prices and how did the critique lead to the
emergence of the theory of imperfect competition?
3. There is a short period perfectly competitive theory of prices but not a long period perfectly
competitive theory of prices. Is this because in the long period we are dead? Discuss.
4. “It has to be recognized that a general abandonment of the assumption of perfect competition, a
universal adoption of the assumption of monopoly, must have very destructive consequences for
economic theory.” Discuss.
Marsahll’s approach for determining market price and output.

competition where firm interdependency exists. How did economists, such as Joan Robinson,
Edward Chamberlin, Robert Hall-Charles Hitch, and others, overcome this problem so as to be
able to construct theoretical models and analysis of imperfect-oligopolistic competition.

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1

ADVANCED MICROECONOMIC ANALYSIS Professor F. S. Lee

a. Derive the marginal product for x1. What direction is it moving?

firm A: TC = y3 - 3y2 + 10y

ADVANCED MICROECONOMIC ANALYSIS Professor F. S. Lee

PRACTICE QUESTIONS FOR IN-CLASS EXAM II

a. Derive the marginal product for x1. What direction is it moving?

b. Derive the average product for x1. What direction is it moving?

d. Determine the elasticity of substitution for x1.

5. A perfectly competitive market in the long period:

firm A: TC = y3 - 4y2 + 12y

a. Derive the marginal product for x1. What direction is it moving?

b. Derive the average product for x1. What direction is it moving?

d. Determine the elasticity of substitution for x1.

ADVANCED MICROECONOMIC ANALYSIS Professor F. S. Lee

TAKE HOME EXAM II

DO THE ALL OF THE PROBLEMS

a. Derive the marginal product for x1. What direction is it moving?

d. Derive the market supply curve.

Firm cost structure 1: TC = y3 – 3y2 + 10y

ADVANCED MICROECONOMIC ANALYSIS Professor F. S. Lee

TAKE HOME EXAM II

DO THE ALL OF THE PROBLEMS

a. Derive the marginal product for x1. What direction is it moving?

b. Derive the average product for x1. What direction is it moving?

d. Determine the elasticity of substitution for x1.

Firm cost structure 1: TC = y3 – 3y2 + 10y

ADVANCED MICROECONOMIC ANALYSIS Professor F. S. Lee

TAKE HOME EXAM II

DO THE ALL OF THE PROBLEMS

a. Derive the marginal product for x1. What direction is it moving?

b. Derive the average product for x1. What direction is it moving?

d. Determine the elasticity of substitution for x1.

Firm cost structure 1: TC = y3 – 3y2 + 10y

ADVANCED MICROECONOMIC ANALYSIS Professor F. S. Lee

TAKE HOME EXAM II

DO THE ALL OF THE PROBLEMS

a. Derive the marginal product for x1. What direction is it moving?

b. Derive the average product for x1. What direction is it moving?

d. Determine the elasticity of substitution for x1.

5. A perfectly competitive market in the long period:

firm A: TC = y3 - 4y2 + 12y

ADVANCED MICROECONOMIC ANALYSIS Professor F. S. Lee

TAKE HOME EXAM II

DO THE ALL OF THE PROBLEMS

a. Derive the marginal product for x1. What direction is it moving?

b. Derive the average product for x1. What direction is it moving?

d. Determine the elasticity of substitution for x1.

Firm cost structure 1: TC = y3 – 3y2 + 10y

ADVANCED MICROECONOMIC ANALYSIS Professor F. S. Lee

Answer ONE Question From Each of the Following Four Sections

I. Answer ONE Question

2. How is Lionel Robbin’s definition of neoclassical economics reflected in the methodology of

3. Optimizing choice against a constraint is the underlying mathematical procedures used in

II. Answer ONE Question

III. Answer ONE Question

IV. Answer ONE Question

ADVANCED MICROECONOMIC ANALYSIS Professor F. S. Lee

Answer ONE Question From Each of the Following Four Sections

I. Answer ONE Question

2. How is Lionel Robbin’s definition of neoclassical economics reflected in the methodology of

3. Optimizing choice against a constraint is the underlying mathematical procedures used in

II. Answer ONE Question

III. Answer ONE Question