Econ 313: Advanced Microeconomics Question Paper
Econ 313: Advanced Microeconomics
Course:Bachelor Of Science (Economics & Statistics)
Institution: Chuka University question papers
Exam Year:2012
CHUKA UNIVERSITY
COLLEGE
UNIVERSITY EXAMINATIONS
FIRST YEAR EXAMINATION FOR THE AWARD OF DEGREE OF
BACHELOR OF SCIENCE (ECONOMICS & STATISTICS)
ECON 313: ADVANCED MICROECONOMICS
STREAMS: BSC. (ECON & STATS) TIME: 2 HOURS
DAY/DATE: TUESDAY 11/12/2012 8.30 A.M – 10.30 A.M.
INSTRUCTIONS:
Answer question One and any other Two questions.
Do not write on the question paper.
Question One (Compulsory)
(a) Discuss the properties of cost function. [5 marks]
(b) Prove the following claims mathematically.
Marginal Cost (MC) curve cuts Average Cost (AC) curve from below and at its minimal point
[4 points]
The oligopolistic joint output is higher than the monopolistic output
but lower than competitive output. [6 marks]
(c) Distinguish between Cournot model and Stackelberg model. [5 marks]
(d) With aid of diagrams discuss the 1st and 2nd welfare theorems showing clearly
the distinction between the two. [10 marks]
Question Two:
Suppose that the consumer’s preferences can be represented by the following utility function:
U = ?x_1?^a ?x_2?^(1-a)
Calculate the Marshallian demands for this consumer. [6 marks]
Derive the indirect utility function for this consumer and state the properties.
[4 marks]
Calculate the expenditure function for this consumer. [5 marks]
Calculate the Hicksian demands for this consumer. [5 marks]
Question Three:
Three oligopolists operate in a market with inverse demand given by P = a-Q where
Q = q1 + q2 + q3. Each firm has a constant marginal cost of production C and no fized cost.
Suppose the three firms simultaneously choose quantities. Find the equilibrium quantities, prices and profits. [10 marks]
What would be the equilibrium quantities if the firms choose their quantities as follows?:
first firm 1 Choose q1, then firm 2 and 3 observe q1 and then simultaneously choose q2 and q3 respectively. [10 marks]
Question Four:
Given the firm’s production function as Y=A? L?^a K^(1-a). Assume that the firm seeks
to minimize costs of producing the level of output Y. Derive the minimum cost.
[10 marks]
Using the concept of duality, recover the underlying production function. [10 marks]
-----------------------------------------------------------------------------------------------------
More Question Papers
Exams With Marking Schemes