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    2700 Advance Microeconomics

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    meelas123
    This document provides instructions and questions for an economics assignment. It warns that plagiarism or hiring others to complete assignments will result in penalties. It then lists 5 questions covering topics in microeconomics including consumer equilibrium, production functions, costs and revenue, discount rates, expected utility, general equilibrium, social welfare, and criteria for measuring welfare improvement. Students are instructed to answer all questions which involve deriving demand curves, elasticities, income shares, supply curves, equilibrium outputs, and distributions to maximize social welfare.

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    Download as DOC, PDF, TXT or read online from Scribd

    2700 Advance Microeconomics

    Uploaded by

    meelas123
    496 views3 pages
    This document provides instructions and questions for an economics assignment. It warns that plagiarism or hiring others to complete assignments will result in penalties. It then lists 5 questions covering topics in microeconomics including consumer equilibrium, production functions, costs and revenue, discount rates, expected utility, general equilibrium, social welfare, and criteria for measuring welfare improvement. Students are instructed to answer all questions which involve deriving demand curves, elasticities, income shares, supply curves, equilibrium outputs, and distributions to maximize social welfare.

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    This document provides instructions and questions for an economics assignment. It warns that plagiarism or hiring others to complete assignments will result in penalties. It then lists 5 questions covering topics in microeconomics including consumer equilibrium, production functions, costs and revenue, discount rates, expected utility, general equilibrium, social welfare, and criteria for measuring welfare improvement. Students are instructed to answer all questions which involve deriving demand curves, elasticities, income shares, supply curves, equilibrium outputs, and distributions to maximize social welfare.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    496 views3 pages

    2700 Advance Microeconomics

    Uploaded by

    meelas123
    This document provides instructions and questions for an economics assignment. It warns that plagiarism or hiring others to complete assignments will result in penalties. It then lists 5 questions covering topics in microeconomics including consumer equilibrium, production functions, costs and revenue, discount rates, expected utility, general equilibrium, social welfare, and criteria for measuring welfare improvement. Students are instructed to answer all questions which involve deriving demand curves, elasticities, income shares, supply curves, equilibrium outputs, and distributions to maximize social welfare.

    Copyright:

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    Download as DOC, PDF, TXT or read online from Scribd
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    You are on page 1of 3

    ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

    (Department of Economics)

    WARNING
    1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING
    THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD
    OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
    2. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM
    OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
    “AIOU PLAGIARISM POLICY”.

    ASSIGNMENT No. 1
    (Units 1–4)
    Course: Advance Microeconomics (2700) Semester: Spring, 2010
    Level: M. Phil Total Marks: 100
    Q.1 (a) Show the equilibrium position of a consumer if,
    U = ( x1 + 2) ( x 2 + 1)
    Px1 = 4 and Px2 = 6 and Income ( Y ) of the consumer =130 . What are
    the income and price elasticities
    (b) Derive the compensated demand curve if U = XY and Px = 1 and Y
    (income) = 200. Show consumer gain in terms of CV if P falls from 1 to 0.5 (20)
    Q.2 Using the following CES production function

    [
    Q = 0.6 K − 2 + 0.4 L− 2 ] −1
    2

    (a)Derive the elasticity of substitution. If ρ = −1 , what would be general


    shape of isoquants for positive K and L?
    1
    (b) Show the relative the relative income share when K = 1 and L =
    2
    (c) What if L now rises to 1. Is this consistent with your finding about σLK .
    (20)
    Q.3 Given the following production function
    K = Q −Q2 +Q3
    Where K is capital per period and q is output per period.
    Derive the firm’s supply curve if wK =1
    1
    How much will it produce per period of P = 1? And if P =
    2
    1
    How much profit is made if P = 1 and P = (20)
    2
    Q.4 Give the following demand function of a firm
    P = 6 − 0.20 X
    And average cost function
    6
    AC = + 2 − 0.3 X + 0.06 X 2
    x
    Where X output of the firm and P is the price of output (X). Find the equilibrium
    output (X) which gives
    (a) Maximum total revenue
    (b) Minimum marginal cost
    (c) Maximum profit (20)
    Q.5 Define cartels. Also discuss the problem which may be faced by the firms in the
    cartels. Let there are large number of firms which can provide platinum with the
    following cost function
    C = 500 +100 X + 5 X 2
    The competitive demand for platinum is
    1
    P = 250 − X
    10
    What would be the competitive equilibrium of this industry? What is the
    equilibrium number of firms? Suppose cartel wished to use revenue pooling as a
    method of restricting output. What fraction of revenue would they require firms to
    put into the pool? (20)

    ASSIGNMENT No. 2
    (Units 5–9)
    Q.1 (a) Define and illustrate with an example the importance of calculating discount
    rate and present value in the evaluation of a project. (10)
    (b) In a certain five years plan, it is decided that the investment should increase
    from 12 billion to 20 billion. Calculate the required annual rate of investment
    to achieve this target. (10)
    Q.2 (a) Discuss the expected utility approach in studying the uncertainty problem in
    microeconomics. (10)
    (b) Give the following payoff matrix and probabilities. (10)
    Plan State 1 State 2
    A 100 100
    B 200 50
    Probability 0.30 0.70
    Show the expected value of income in both decisions
    Draw a diagram to show that if u(x) is concave (downward) then
    E (u I A) > E (u I B)
    Q.3 Discuss in detail the possibility of general equilibrium in both production and
    consumption simultaneously. (20)
    Q.4 (a) Discuss how an economy can reach to social justice and social optimum. (10)
    (b) Give x 2 + y 2 = 80 , u A = x A y A uB = xB yB w = u A u B w = uAuB
    How much x and y should be produced and how should it be distributed? (10)
    2
    Q.5 Enlist and elaborate different criteria for welfare improvement of a society in detail.
    (20)

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