1) Describe graphically and algebraically with minimal (but necessary) discussion how the demand function and the inverse demand function relate to the two ways of defining a demand curve, as well as a change in demand.

2)Describe graphically and algebraically with minimal (but necessary) discussion how the supply function and the inverse supply function relate to the two ways of defining a supply curve, as well as a change in supply.

3)Suppose there is an increase in the marginal cost of production for firms in a perfectly competitive industry. Describe graphically with minimal (but necessary) discussion the impact this has on the market in terms of change in equilibrium price and quantity. Outline the process of movement from one equilibrium to the next.

4)We define two goods as complements using the definition that "A is a complement to B if an increase in the price of A leads to a decrease in the demand for B." What is the important "ceteris paribus" assumption that is necessary for this definition to be accurate?

5)Using a graphical analysis with minimal discussion, in what sense is an increase in a binding minimum wage argued to be good for some, but not good for all minimum wage workers? In what sense does your answer to this question depend on whether the time frame under consideration is soon versus later?

6)Suppose the elasticity of demand is equal to one at each point on a demand curve. Graph this particular demand curve and explain why the elasticity of demand equals one at each point.

7)Using calculus, show how MR is related to the elasticity of demand. Summarize the implications for TR. In what sense does this imply a single price monopolist would always produce where demand is elastic?

8)Suppose the inverse demand function is P = A - BQ.

a. Solve for the Ed for this demand curve.

b.How does the Ed vary as one moves along the demand curve?

9)Ceteris paribus, graphically show why government revenues from a particular per unit tax are greater if demand and supply are relatively inelastic.

10)Show why the MRS_{A for B}is equal to the MU_A/MU_B

11)With good A on the "X axis," what is the implication of a horizontal PCC in terms of the elasticity of demand for good A. Briefly and succinctly explain your answer?

12)Describe graphically with minimal (but necessary) discussion the Hicksian income/substitution decomposition that would lead to a perfectly inelastic demand curve.

13)Describe graphically with minimal (but necessary) discussion the Hicksian income/substitution decomposition that would lead to a situation with an income effect equal to zero.

14)Describe graphically with minimal (but necessary) discussion the EV, UEV, EU of the gamble, and MW P for the following gamble: P1=30% of $500 and P2=7 0% of $0. Why does the answer to your question depend on whether the individual is risk averse or risk loving?

15)What is meant by the present value of utility of an event to occur in the future? What is meant by the discount rate? How does the discount rate effect the current utility of a future event?

16)Mathematically, why does the law of diminishing returns imply MC increase s as output increases?

17)Graphically, using isoquants and isocost lines, define the expansion path of a firm that is characterized by increasing returns to scale.

18)Graphically, show how the LRAC curve relates to a "set of SRATC" of the firm.

19)With a general profit defined as = TR-TC, what are the F.O.C. and S.O.C. for profit maximization? What is the economic relevance of these two mathematical conditions?

a.In what sense are these different for a firm in a perfectly competitive industry?

20)Why do we model the perfectly competitive firm as facing a perfectly elastic demand curve when the market demand curve is not perfectly elastic?

21)Describe graphically with minimal (but necessary) discussion why the MC curve above minimum AVC represents the firm's supply curve at market prices above minimum AVC. Why is there a perfectly inelastic portion of the supply curve for low prices?

22)Based on your discussion in last question above, why would a per-unit tax of $1 per unit shift the firm's supply curve up vertically by $1?

23)Using constant MC and linear demand, construct a specific graphical example in which a single price profit maximizing monopolist makes zero economic profit in the SR. Graphically depict this case with marginal cost and average cost curves. On a separate graph, show the profit function.

24)Form a question, with specific parameters in which a monopolist faces a linear downward sloping demand curve and constant MC. Depict the output and optimal pricing for the following cases,calculating profits/losses.

a.As a single price monopolist the firm would face economics losses, but operate in the short run.

b.As a perfect price discriminating monopolist the firm makes economic profits.

25)What is the HHI? Would we expect it to be high or low for a duopoly?

26)Based on the example we discussed, describe in a few words what the Cournot Nash Equilibrium is for firms that make up a duopoly.

27)Why do we expect advertising to be more prevalent in an industry with the characteristics of monopolistic competition?

28)Suppose a single price monopolist faces the inverse demand curve: P = 50- 2Q. Further suppose this monopolist faces a constant MC curve: MC = 10.Compute the welfare loss created when this single monopolist maximizes profits.

29)Suppose a perfectly competitive market has the following inverse supply and demand curves:

Supply: P= 5+2Q

Demand: P=50-Q

a.Solve for the perfectly competitive Pe and Qe, and calculate consumer+producer surplus at Pe, Qe.

b.Suppose each unit of good produced created a negative externality to society valued at $1 per unit. Show graphically the welfare loss if the externality is ignored.