海南大学2009-2010学年度第1学期《微观经济学》答案(4卷) 一、Please explain the following glossary:(每题5分，共50分) 1.Arbitrage-Practice of buying at a low price at one location and selling at a higher price in another. 2.Monopolistic competition -Market in which firms can enter freely,each producing its own brand or version of a differentiated product. 3.Budget line-All combinations of goods for which the total amount of money spent is equal to income. 4.Diminishing marginal utility-Principle that as more of a good is consumed the consumption of additional amounts will yield smaller additions to utility. 5.Economic rent-Amount that firms are willing to pay for an input less the minimum amount necessary to obtain it. 6.Inferior good-A good for which consumption falls as an individual's income rises. 7.Sequential game-Game in which players move in turn,responding to each other's actions and reactions. 8.Intertemporal price discrimination-Practice of separating consumers with different demand functions into different groups by charging different prices at different points in time. Welfare effeets Gains and losses caused by government intervention in the market 10 Zero economic profit A firm is earning a normal return on its investment-i.e.,that It is doing as well as it could by investing its money elsewhere 二、简答题：（共10分） 1.Faced with a reputation for producing automobiles with poor repair records,a number of Americar companies have offe ered guarantees to ca purchasers (e.g.,a seven-year warranty on all parts and labor associated with mechanical problems). a.In light of your knowledge of the lemons market,why is this a reasonable policy? b.Is the policy likely to create a moral hazard problem?Explain a.In the recent past,American automobiles appeared to customers to be of lower
海南大学 2009-2010 学年度第 1 学期《微观经济学》答案(A 卷) 一、Please explain the following glossary：（每题 5 分，共 50 分） 1. Arbitrage - Practice of buying at a low price at one location and selling at a higher price in another. 2. Monopolistic competition - Market in which firms can enter freely, each producing its own brand or version of a differentiated product. 3. Budget line - All combinations of goods for which the total amount of money spent is equal to income. 4. Diminishing marginal utility - Principle that as more of a good is consumed, the consumption of additional amounts will yield smaller additions to utility. 5. Economic rent - Amount that firms are willing to pay for an input less the minimum amount necessary to obtain it. 6. Inferior good - A good for which consumption falls as an individual’s income rises. 7. Sequential game - Game in which players move in turn, responding to each other’s actions and reactions. 8. Intertemporal price discrimination - Practice of separating consumers with different demand functions into different groups by charging different prices at different points in time. 9 Welfare effects Gains and losses caused by government intervention in the market. 10 Zero economic profit A firm is earning a normal return on its investment-i.e., that it is doing as well as it could by investing its money elsewhere. 二、简答题：（共 10 分） 1. Faced with a reputation for producing automobiles with poor repair records, a number of American companies have offered extensive guarantees to car purchasers (e.g., a seven-year warranty on all parts and labor associated with mechanical problems). a. In light of your knowledge of the lemons market, why is this a reasonable policy? b. Is the policy likely to create a moral hazard problem? Explain. a. In the recent past,American automobiles appeared to customers to be of lower
improving the repair records of their products.They signaled the improved quality of their products through improved warranties. b.Moral hazard occurs when the party to be insured(the owner of an American automobile with an extensive warranty)can influence the probability of the event that triggers payment (the repair ofthe automobile).Covering all parts and labor associated with mechanical p oblemsreduces the incentive tomaintain Hence,a moral hazard problem is created with extensive warranties. 三、Calculation:(每题20分，共40分) 1.Sal's satellite company broadeasts TV to subscribers in Los Angeles and New York.The demand functions for each of these two groups are Qy=60-0.25P、y Q4=100-0.50P4 whereQ is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by C=1,000+40Q where Q=Qxy QL a.What are the profit-maximizing prices and quantities for the New York and Los Angeles markets? We know that a monopolist with two markets should pick quantities in each market so that the marginal revenues in both markets are equal to one another and equal to marginal cost.Marginal cost is $40(the e of the total cos curve). To determine marginal revenues in each market,we first solve for price as a function of quantity Pyr=240-40xr and P4=200-20A Since the marginal revenue curve has twice the slope of the demand curve the marginal revenue curves for the respective markets are: MRNY=240-8ONy and MR4=200-4QL4 Set each marginal revenue equal to marginal cost,and determine the profit-maximizing quantity in each submarket:
quality. To reverse this trend, American companies invested in quality control, improving the repair records of their products. They signaled the improved quality of their products through improved warranties. b. Moral hazard occurs when the party to be insured (the owner of an American automobile with an extensive warranty) can influence the probability of the event that triggers payment (the repair of the automobile).Covering all parts and labor associated with mechanical problems reduces the incentive to maintain the automobile. Hence, a moral hazard problem is created with extensive warranties. 三、Calculation：（每题 20 分，共 40 分） 1. Sal’s satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are QNY = 60 – 0.25PNY QLA = 100 – 0.50PLA where Q is in thousands of subscriptions per year and P is the subscription price per year. The cost of providing Q units of service is given by C = 1,000 + 40Q where Q = QNY + QLA. a. What are the profit-maximizing prices and quantities for the New York and Los Angeles markets? We know that a monopolist with two markets should pick quantities in each market so that the marginal revenues in both markets are equal to one another and equal to marginal cost. Marginal cost is $40 (the slope of the total cost curve). To determine marginal revenues in each market, we first solve for price as a function of quantity: PNY = 240 - 4QNY and PLA = 200 - 2QLA. Since the marginal revenue curve has twice the slope of the demand curve, the marginal revenue curves for the respective markets are: MRNY = 240 - 8QNY and MRLA = 200 - 4QLA. Set each marginal revenue equal to marginal cost, and determine the profit-maximizing quantity in each submarket:
40=240.80 VT,or ON=25and 40=200-404,0rQL=40 Determine the price in each submarket by substituting the profit-maximizing quantity into the respective demand equation: Pwy=240-(4)(25)=$140and PL4=200-(240)=$120. b.Asa consequence of a new satellite that the Pentagon recently deployed,people in LosAngeles receive Sal's New York broadcasts,and people in New York receive Sal's Los Angeles broadcasts.As a result,anyone in New York or Los Angeles can receive Sal's broadeasts by subseribing in either city.Thus Sal can charge only a single price.What price should he charge,and what quantities will he sell in New York and Los Angeles? Given this new satellite,Sal can no longer separate the two markets,so he now needs to consider the total demand function,which is the horizontal summation of the LA and NY demand functions.Above a price of 200(the vertical intercep of the demand finction for Los Angeles viewers)the total we add the two demands: Qr=60-0.25P+100-0.50P,orQr=160-0.75P Rewriting the demand function results in 1601 P=05-0750 Now total revenue PO=(213.3-1.30)0,or 213.30-1.30,and therefore. MR=213.3-2.60 Setting marginal revenue equal to marginal cost to determine the profit-maximizing quantity: 213.3-2.60=40,0rQ=65. Substitute the profit-maximizing quantity into the demand equation to determine price: 65=160-0.75PorP=$126.67
40 = 240 - 8QNY, or QNY = 25 and 40 = 200 - 4QLA, or QLA = 40. Determine the price in each submarket by substituting the profit-maximizing quantity into the respective demand equation: PNY = 240 - (4)(25) = $140 and PLA = 200 - (2)(40) = $120. b. As a consequence of a new satellite that the Pentagon recently deployed, people in Los Angeles receive Sal’s New York broadcasts, and people in New York receive Sal’s Los Angeles broadcasts. As a result, anyone in New York or Los Angeles can receive Sal’s broadcasts by subscribing in either city. Thus Sal can charge only a single price. What price should he charge, and what quantities will he sell in New York and Los Angeles? Given this new satellite, Sal can no longer separate the two markets, so he now needs to consider the total demand function, which is the horizontal summation of the LA and NY demand functions. Above a price of 200 (the vertical intercept of the demand function for Los Angeles viewers), the total demand is just the New York demand function, whereas below a price of 200, we add the two demands: QT = 60 – 0.25P + 100 – 0.50P, or QT = 160 – 0.75P. Rewriting the demand function results in P = 160 0.75 − 1 0.75 Q. Now total revenue = PQ = (213.3 – 1.3Q)Q, or 213.3Q – 1.3Q 2 , and therefore, MR = 213.3 – 2.6Q. Setting marginal revenue equal to marginal cost to determine the profit-maximizing quantity: 213.3 – 2.6Q = 40, or Q = 65. Substitute the profit-maximizing quantity into the demand equation to determine price: 65 = 160 – 0.75P, or P = $126.67
Although a price of$126.67 is charged in both markets,different quantities are purchased in each market. Qw=60-0.25026.6)=28.3 and 91=100-0.50126.67=36.7. Together,65 units are purchased at a price of $126.67 each. c.In which of the above situations,(a)or(b),is Sal better off?In terms of consumer surplus,which situation do people in New York prefer and which do people in Los Angeles prefer?Why? Sal is better off in the situation with the highest profit.Under the market condition inprofit is equal to π=P+OLP-(1,000+40(w+Q八.om 元=(25($140)+(40(120)-(1,000+40(25+40)=$4,700 Under the market conditions in profit is equal to π=0P-(1,000+402,or π=(126.67)(65)-(1,000+(40)(65)》=$4633.33. Therefore,Sal is better off when the two markets are separated Consumer surplus is the area under the demand curve above price.Under the market conditions in 8a,consumer surpluses in New York and Los Angeles are: CSw=(0.5X240-14025)=$1250and CS4=(0.5)200-12040)=$1600 Under the market conditions in 8b the respective consumer surpluses are: CSr=(0.5240-126.67)28.3)=$1603.67and CS4=(0.5200-126.6736.7)=$1345.67 The New Yorkers prefer 8b because the equilibrium price is $126.67 instead of $140,thus giving them a higher consumer surplus.The customers in Los Angeles prefer 8a because the equilibrium price is $120 instead of $126.67. 2 A beekeeper lives adjacent to an apple orchard.The orchard owner benefits from the bees because each hive pollinates about one acre of apple trees.The
Although a price of $126.67 is charged in both markets, different quantities are purchased in each market. QNY = 60 − 0.25(126.67) = 28.3 and QLA = 100− 0.50(126.67)= 36.7. Together, 65 units are purchased at a price of $126.67 each. c. In which of the above situations, (a) or (b), is Sal better off? In terms of consumer surplus, which situation do people in New York prefer and which do people in Los Angeles prefer? Why? Sal is better off in the situation with the highest profit. Under the market condition in 8a, profit is equal to: = QNYPNY + QLAPLA - (1,000 + 40(QNY + QLA)), or = (25)($140) + (40)($120) - (1,000 + 40(25 + 40)) = $4,700. Under the market conditions in 8b, profit is equal to: = QTP - (1,000 + 40QT), or = (126.67)(65) - (1,000 + (40)(65)) = $4633.33. Therefore, Sal is better off when the two markets are separated. Consumer surplus is the area under the demand curve above price. Under the market conditions in 8a, consumer surpluses in New York and Los Angeles are: CSNY = (0.5)(240 - 140)(25) = $1250 and CSLA = (0.5)(200 - 120)(40) = $1600. Under the market conditions in 8b the respective consumer surpluses are: CSNY = (0.5)(240 – 126.67)(28.3) = $1603.67 and CSLA = (0.5)(200 – 126.67)(36.7) = $1345.67. The New Yorkers prefer 8b because the equilibrium price is $126.67 instead of $140, thus giving them a higher consumer surplus. The customers in Los Angeles prefer 8a because the equilibrium price is $120 instead of $126.67. 2 A beekeeper lives adjacent to an apple orchard. The orchard owner benefits from the bees because each hive pollinates about one acre of apple trees. The
orchard owner pays nothing for this service.however,because the bees come to the orchard without his having to do anything.Because there are not enough bees to pollinate the entire orchard,the orchard owner must complete the pollination by artificial means,at a cost ofS10 per acre of trees. Beekeeping has a marginal cost of MC =10+5Q,where Q is the number of beehives.Each hive yields $40 worth of honey. a.How many bechives will the beekeeper maintain? The beekeepe nizes profits,when With a constant marginal revenu has any market power)and a marginal cost of 10+50: 40=10+50,or9=6. b.Is this the economically efficient number of hives? If there are too few bees to pollinate the orchard,the farmer must pay $10 per acre for artificial pollination.Thus,the farmer would be willing to pay up to $10 to the beekeep er to maintain each additional hive.So,the ginal so benefit,MSB,of each additional hive isS50.which is greater than the margina private benefit of $40.Assuming that the private marginal cost is equal tothe social marginal cost,we set MSB =MC to determine the efficient number of hives 50=10+50,orQ=8. Therefore,the beekeeper's private choice of =6 is not the socially efficient number of hives c.What changes would lead to the more efficient operation? The most adical change that be the merger of the farmer's business with the beekeeper's business.This merger would internalize the positive extemality of bee pollination.Short ofa merger.the farmer and beekeeper should enter into a contract for pollination services
orchard owner pays nothing for this service, however, because the bees come to the orchard without his having to do anything. Because there are not enough bees to pollinate the entire orchard, the orchard owner must complete the pollination by artificial means, at a cost of $10 per acre of trees. Beekeeping has a marginal cost of MC = 10 + 5Q, where Q is the number of beehives. Each hive yields $40 worth of honey. a. How many beehives will the beekeeper maintain? The beekeeper maintains the number of hives that maximizes profits, when marginal revenue is equal to marginal cost. With a constant marginal revenue of $40 (there is no information that would lead us to believe that the beekeeper has any market power) and a marginal cost of 10 + 5Q: 40 = 10 + 5Q, or Q = 6. b. Is this the economically efficient number of hives? If there are too few bees to pollinate the orchard, the farmer must pay $10 per acre for artificial pollination. Thus, the farmer would be willing to pay up to $10 to the beekeeper to maintain each additional hive. So, the marginal social benefit, MSB, of each additional hive is $50, which is greater than the marginal private benefit of $40. Assuming that the private marginal cost is equal to the social marginal cost, we set MSB = MC to determine the efficient number of hives: 50 = 10 + 5Q, or Q = 8. Therefore, the beekeeper’s private choice of Q = 6 is not the socially efficient number of hives. c. What changes would lead to the more efficient operation? The most radical change that would lead to more efficient operations would be the merger of the farmer’s business with the beekeeper’s business. This merger would internalize the positive externality of bee pollination. Short of a merger, the farmer and beekeeper should enter into a contract for pollination services