Problem set 2 Micro Theory S. Wang Question 2. 1. You have just been asked to run a company that has two factories produc ing the same good and sells its output in a perfectly competitive market. The production

Corporate finance 1. Theoretical Approaches 1.1. Corporate Finance in Arrow-Debreu world Complete market, perfect market, perfect competition, symmetric information, private consumption Risk: risk sharing, risk pooling, technology shocks, individual vs aggregate shocks Lucas(1978): existence of equilibrium asset price Merton: continuous-time pricing model

10. More on Production a. Derived Demand-Marshall's Laws b. Long Run/Short Run, LeChatelier, Dynamics C. Aggregating Supply d. Theory of the Firm, the Holdup Problem e. Agency Issues f. Application: The Coase Theorem

2. Choice and Utility Functions a. Choice in Consumer Demand Theory and Walrasian Demand b. Properties of demand from continuity and properties from WARP . Representing Preferences with a Utility Function d. Demand as Derived from Utility Maximization e. Application: Fertility

4. Welfare Analysis and Other Issues a. Measuring Welfare b. First Order and Second Order Losses C. Taxes and Welfare d. Household Production (did last class) e. The Hedonic Approach

6. Choice Under Uncertainty a. Representing Uncertainty: Lotteries and Compound Lotteries b. Axioms of Expected Utility C. The Expected Utility Theory d. Empirical Challenges to Expected Utility Theory-the Paradox Business e. Application: Crime and punishment

8. Financial Markets a. Insurance Markets b. Moral Hazard C. Adverse Selection with one price contracts d. Simple Financial Markets-Comparative Statics e. Option Pricing and Redundant Assets

9. The Producer's Problem a. Firms and Maximization b. Production Functions C. Supply and Profit Functions d. Cost Functions e. Duality and Producers f. Application: Urban Systems

7. More on Uncertainty Prospect Theory, LoSS Aversion b. Subjective Utility and Common Knowledge Risk Aversion d. First and Second Order stochastic Dominance Asset demand and risk Aversion

1.使用范围:第七章“垄断竞争市场” 2.要考核的知识点:垄断竞争形成的条件差异化战略与垄断竞争均衡