WorksheetsS1W11
Total questions: 18
Worksheet time: 36mins
Ch1 - Q1
You are planning a last-minute, 200-mile trip to Manchester. Except for cost, you are indifferent between driving and taking the train. The costs of operating your car during a typical 10,000-mile driving year are as follows:
Interest: £2000
Fuel and oil: £1200
Tires: £200
License and registration: £50
Maintenance: £1100
Total: £4550
If you are rational, what will be your threshold price for buying a train ticket? (Round your answer to the nearest £10.)
(a)
Ch1 - Q2
Your friend is trying to cheat in the exam and has passed you a note asking what the common pitfalls of decision-making are?
Ignoring implicit costs
Failure to ignore sunk costs
Measuring costs and benefits as proportions rather than in absolute monetary terms
Failure to distinguish between average and marginal properties
Ch2 - Q1
Two common findings from labour market economics are that:
(i) low-skilled immigration, even at a fairly large scale, puts only a very small downward pressure on low-skilled wages;
(ii) minimum wage increases often have only very small negative effects on low-skilled employment.
If we wanted to model the low-skilled labour market using the supply and demand framework, what would we need to assume about the demand and/or supply curves so that our model was consistent with the findings in the low-skill labour market noted above?
(i) implies that demand is elastic.
(ii) implies that demand is elastic.
(i) implies that demand is elastic.
(ii) implies that demand is inelastic.
(i) implies that supply is elastic.
(ii) implies that demand is elastic.
(i) implies that supply is elastic.
(ii) implies that demand is inelastic.
Ch2 - Q2
Moschini and Meilke estimated a demand function for processed pork in Canada as:
Q = 180 - 30p + 30 pb + 13pc + 12Y
Where Q is the quantity of pork demanded (in millions of kilos), p is the price of pork in Canadian dollars per kilogram, pb is the price of beef in dollars per kilogram, pc is the price of chicken
in dollars per kilogram, and Y is the income of consumers in thousands of dollars per year.
What do the coefficients on p, pb, pc, and Y imply about how these variables affect the demand for pork?
Ch3 - Q1
Santa Claus and the elves are playing a quiz game against Grinch, if they answer the questions
wrong Grinch will leave the city . Identify which (if any) of the following are coordination games
“Battle of the Sexes” is a coordination game
Matching Pennies” is a coordination game
“The Prisoners’ Dilemma” is a coordination game
Stag Hunt” is a coordination game
Ch3 - Q2
Santa Claus and Jack Frost are facing off in a magical duel. Each can choose between two spells: ’Enchanting Christmas’ or ’Snow Disruption.’ The outcome of their duel depends on their spell choices. If both wizards cast ’Enchanting Christmas,’ they create a harmonious magical aura, and both benefit equally. If both cast ’Snow Disruption,’ they create chaos, resulting in a negative outcome for both.
Coordination game, Nash Equilibrium (Enchanting Christmas, Enchanting Christmas)
Game of conflict, Nash equilibrium: (Snow Disruption, Snow Disruption)
Coordination game, Nash equilibrium: (Enchanting Christmas, Enchanting Christmas)
Game of conflict, Nash equilibrium: (Snow Disruption, Snow Disruption)
Ch4 - Q1
Dolly the sheep needs to get out of the wolf’s stomach, but first she needs to answer a simple economics question. If Dolly answers correctly then the wolf will let her out but if she doesn’t the wolf’s stomach will get bigger and she will forever be trapped in there. As you understand, Dolly really needs your help. The question is: If the prices of all products are rising at 15% per year and your employer gives you a 15% salary increase, are you better off, worse off or equally well off in comparison with your situation last year?
Better off
Worse off
Equally well off
Ch4 - Q2
True or False: if you are presented with a single, upward-sloping indifference curve for various bundles of x and y, you can say that one of the items is a good and the other is a bad, but you cannot say which is which.
True
False
There's not enough information provided
Ch5 - Q1
Given the demand function q=-5p+120, find the point elasticity of demand when p=20
(a)
Ch5 - Q2
Suppose you are given the constant elasticity of demand curve with the form Qd=aP^(-E), where a is a positive constant and E is the absolute value of the PED. If quantity demanded is 200 when the price is $50 and the short-run PED is -0.2, what is the value of the constant a (round to the nearest whole number).
(a)
Ch6 - Q1
Harrison is walking through Marchmont and he comes across a cafe. He realises that he wants coffee and that a good characterisation of his demand curve for coffee would be the equation P = 3-Q. Which of the following statements are true?
At a price of £3.75 per can, Harrison will buy exactly one cup of coffee
At a price of £2.75 per can, Harrison will buy exactly one cup of coffee
At a price of £1.75 per can, Harrison will buy exactly one cup of coffee
At a price of £0.75 per can, Harrison will buy exactly one cup of coffee
Ch6 - Q2
The only movie rental club available to you charges €4 per movie per day. If your demand curve for movie rentals is given by P = 10 - Q, where P is the rental price(€/day) and Q is the quantity demanded (movies per year), what is the maximum annual membership fee you would be willing to pay to join this club?
Ch7 - Q1
Suppose you buy a new jumper from Gucci for your mom, at a cost of £400, your mom
wears it once and ends up hating it but you can no longer return it. So you hang onto it
for a few months and try to resell it on Depop. Since you know it’s never been worn and
that it should still be worth close to what you paid for, you decide to list it for £360, which
is 10 per cent off the new price. How is this going to turn out?
Ch7 - Q2
What is meant by risk aversion and why is it plausible to assume most people are risk
averse?
Ch8 - Q1
Consider a population with two types of people, C’s and D’s. Interactions among various combinations of the two types produce the following payoffs:
C-C: 6 each
C-D: 8 for D, 0 for C
D-D: 4 each
Invisible contact lenses are available at a cost of 1 unit that enable the wearer to identify each person’s type with certainty. Without the lenses the two types are indistinguishable.
a) What will be the equilibrium population shares of the two types?
b) How would your answer differ if the payoff for D-D interactions was 5.5?
Ch8 - Q2
Consider a Hawk-Dove game. When two Doves interact, they each gain 3 units of utility.
When two Hawks interact, they both gain 0 units of utility. When a Hawk interacts with
a Dove, the Hawk gains 5 units of utility and the Dove gains 1 unit of utility. Find the
equilibrium proportion of the population of Hawks and Doves.
Ch9 - Q1
Jenny will drive across town to take advantage of a ‘50% off’ sale on a €40 blouse but will not do so to take advantage of a ‘5% off’ sale on a €1000 stereo. Assuming that her alternative is to pay the list price for both products at the department store next to her home, is her behavior rational?
Yes
No
Ch9 - Q2
What is the role of the probability weighting function in prospect theory?
