Econ 251, Final, Purdue with Complete
Solutions
Budget Line - ANSWER-the combination of goods that uses all of the income
cartel - ANSWER-group of firms in an oligopoly acting like a monopolist.- collusion
results from punishment
ex.) I'll charge high prices if you do too
Causes of Income inequalities - ANSWER-1. Differences in human capital investments
2.Discrimination
-statistical discrimination
-employer discrimination
-coworker discrimination
-costumer discrimination
-collusion-> incentive to cheat
Characteristics of the IC (3) - ANSWER--negative slope
-MRS is equal the slope
-slope gets flatter as x increases
Coase Theorem - ANSWER-private transactions can be efficient if:
-property rights are defined
-small # of people involved
-low transaction costs
Concentration of HHI (merger guidelines) - ANSWER-HHI < 1500 Unconcentration
HHI </= 2500 Moderatley Concentration
HHI > 2500 Concentration
consumer equilibrium - ANSWER-MUx/Px = MUy/Py
contestable market - ANSWER-firms face competition from potential entrants
coordination game - ANSWER--2 players
-2 strategies
-neither player has a dominant strategy
-has nash equilibrium
ex.) Hd/Bluray & Ballet/Football
Dominant Strategy - ANSWER-A single strategy that always generates the highest
payoff regardless of the competitors strategy.
Solutions
Budget Line - ANSWER-the combination of goods that uses all of the income
cartel - ANSWER-group of firms in an oligopoly acting like a monopolist.- collusion
results from punishment
ex.) I'll charge high prices if you do too
Causes of Income inequalities - ANSWER-1. Differences in human capital investments
2.Discrimination
-statistical discrimination
-employer discrimination
-coworker discrimination
-costumer discrimination
-collusion-> incentive to cheat
Characteristics of the IC (3) - ANSWER--negative slope
-MRS is equal the slope
-slope gets flatter as x increases
Coase Theorem - ANSWER-private transactions can be efficient if:
-property rights are defined
-small # of people involved
-low transaction costs
Concentration of HHI (merger guidelines) - ANSWER-HHI < 1500 Unconcentration
HHI </= 2500 Moderatley Concentration
HHI > 2500 Concentration
consumer equilibrium - ANSWER-MUx/Px = MUy/Py
contestable market - ANSWER-firms face competition from potential entrants
coordination game - ANSWER--2 players
-2 strategies
-neither player has a dominant strategy
-has nash equilibrium
ex.) Hd/Bluray & Ballet/Football
Dominant Strategy - ANSWER-A single strategy that always generates the highest
payoff regardless of the competitors strategy.
