Dominick Salvatore Schaums Outline of Microeconomics, 4th edition Schaums Outline Series 2006

Final Examination
1. Given Fig. F-l for a perfectly competitive firm, (a) determine the firm’s best, or optimum, level of
output, and P x , AC, AVC, AFC, and profits per unit of output in total. What happens in the long
run? (b) Which is the shut-down point? What is the firm’s short-run supply curve? How can you get
the industry short-run supply curve in the absence of external economies or diseconomies?
Fig. F-1
2. Draw a figure showing how the government can reduce a monopolist’s profits by imposing a per-unit
tax. Will the monopolist bare the entire burden of the tax? Why?
3. Compare the efficiency implications of long-run equilibria under different forms of market organization,
with respect to (a) total profits, (b) the point of production on the LAC curve, (c) allocation of resources,
and (d) sales promotion.
4.
The following payoff matrix indicates that firm A has a choice of two possible strategies (A1 and A2),
while firm B has the choice of three strategies (B1, B2, and B3). The payoffs payoffs refer to the percentage
gain (þ) or loss (2) in market share by firm A (and loss or gain in market share, respectively, by
firm B). Determine (a) Firm A’s optimal strategy and (b) Firm B’s optimal strategy.
Table F-1
Matrix of Firm A’s Gain (þ) Loss (2) of Market Share in
Percentages
Firm A
Firm B
B1 B2 B3
A1 1 0 2
A2 22 21 0
5. Show how to derive (a) the demand curve for labor of a firm that is a perfect competitor in the input
market, (b) when labor is the only variable input, and (c) when labor is one of several variable inputs.
5.
For an economy of two factors (L and K), two commodities (X and Y) and two individuals (A and B),
(a) state the condition for Pareto optimum in production, in exchange, and in production and exchange
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