Esempio/prova d\'esame 15 Maggio 2019, domande+risposte PDF

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Economic  Policy Spring  201 9Mid-Term Mock ExamMay 15 ,  201 945  minutes Thisisaclosed bookexam:nonotesinanyformatmaybeusedduringtheexam.Calculatorsarenotallowed and cellphonesmustbeturnedoff. ANYTRANSGRESSIONOF THESERULESWILLLEAD TOEXCLUSIONFROMTHISEXAMAND POSSIBLYOTHER SANCTI...

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Economic!Policy Spring!2019

Student no. Last name First name

Mid-Term&Mock Exam& May 15,&2019 45&minutes& This is a closed book exam: no notes in any format may be used during the exam. Calculators are not allowed and cell phones must be turned off.  ANY TRANSGRESSION OF THESE RULES WILL LEAD TO EXCLUSION FROM THIS EXAM AND POSSIBLY OTHER SANCTIONS. Only what you write on page 1 to 8 will be taken into account when grading this exam.

Please&write&your&name&and&student&ID&on&this&page&NOW.

1

Part&A&(30&points).&Each&of&the&6&questions&gives&you&5&points&if&the&answer&is&correct,&2& points&if&no answer&is&provided&and&0&points&if&the&answer&is&incorrect.&Please&mark your&choice. 1: In!the!figure!below,!ω!is!the!point!of!initial!endowments!of!the!two!agents,!A!and!B,!in!the! Edgeworth!box,! I*A  is!an!indifference!curve!of!agent!A!and! I*B  is an!indifference!curve !of agent B. Which is correct?

* , X B* 2 ) (a) The allocation!where!Agent!A!gets!(i.e.!consumes)! (X *A1, X A* 2 ) !and!agent!B!gets (X B1 describes!a!disequilibrium!where!there!is!excess!demand!for!good!1!and!excess!supply!of! good  * (b) The!allocation!where!Agent!A!gets!(i.e.!consumes)! (X *A1, X A* 2 ) !and!agent!B!gets (X B1 , X B* 2 ) 

is Pareto!efficient. * * * * (c) The!allocation!where!Agent!A!gets!(i.e.!consumes) ! (X A1, X A 2 ) !and!agent!B!gets (X B1 , X B 2 ) is not!feasible.

2:!With!P(Q)!the!inverse!demand!curve,!what!is!the!correct!expression!for!marginal(revenue? (a)

dP Q+ P(Q)  dQ

(b)

dP + P(Q) dQ

(c)

dP + P(Q)Q dQ 2

3: Consider the following table, showing quantities produced and prices in a country in the two years, 2014!and 2015: 2014 2015 Milk, (quantity liters) 1200 1500 2400 1400 Bananas,!(quantity kg) Milk, (price per liter) 1 0.8 1 1.2 Bananas, (price per!kg) (a) Using the Laspeyres!price!index there is!no!inflation between!2014!and!2015. (b) Using the!Laspeyres!price!index there is!negative!inflation!(i.e.!deflation) between!2014 and 2015. (c) Using the!Laspeyres!price!index there is!positive!inflation between!2014!and!2015.

4: The(Groves1Clarke(tax.!There!are!10!shops!in!a!shopping!mall!who!have!to!decide!to!build!a! parking!lot!at!the!cost!of!€120.000.!If!the!parking!lot!is!built,!each!shop!must!pay!€12.000.! Each shop!i!reports!its!value,!vi!of!the!parking!lot,!which!may!be!true!or!not.!Shops!may!also have!to!pay!a!tax.!Which!statement!about!the!tax!being!paid!is!correct?! 10

(a) If

∑v

j

≥108.000 !and!also

j ≠i

(b) If

∑v ∑v j ≠i

j

j

 and!also

∑v

≥120.000  shop!i!pays!the!tax ∑ v j −108.000 . j ≠i

j =1 10

j ≠i

(c) If

∑v

j

≥120.000  shop!i!pays!the!tax 108.000 -

j =1 10 j

!and!also

∑v j =1

∑v

j

j ≠i

j

!shop!i!pays!the!tax 108.000 -

∑v

j

j ≠i

5: Suppose!there!are!6!agents!in!the!economy,!A,!B,C!and!I,!II!and!III.!A,!B,!and!C!are!each!the! owner!of!one!copy!of!a!textbook!in!economics.!To!A!this!textbook!has!value!€30,!to!B!it!has! value €20!and!to!C!it!has!value!€10.!I,!II!and!III!do!not!own!this !textbook!and!I!is!willing!to!pay!   !! up!to!€60!to!obtain!one,!whil e!II!would!pay!up!to!€50!and!III!up!to!€40!for!a!copy.   (a) I f the!price!floor!(minimum

  . price ) €35 is imposed this leads to a Pareto inefficiency

(b) If!the!price!ceiling!(maximum!price)!€25!is!imposed!this!leads!to!a!Pareto!inefficiency.  (c) If!the!price!ceiling!(maximum!price)!€35!is!imposed!this!leads!to!a!Pareto!inefficiency.

3

6: When!modeling!monopoly(behavior!in!the!Edgeworth!box,!with!agent!A!being!the! monopolist,!we!use!the!offer(curve. (a) This!curve!describes the!choice!of!agent!B!among!the!consumption!bundles!offered!by agent!A,!the!monopolist. (b) This!curve!describes!the!offers!which!agent!A,!the!monopolist,!makes!to!agent!B as a function of the price vector (p1,p2).



(c) This!curve!describes!the!optimal!consumption!bundle of!B!as!a!function of!the!price!vector (p1,p2).

Part&B&(30&points).!Please write!your!answer!in!the!space after!the!question. (i) Present!the!model!with!an!externality!(a!polluting!firm!and!a!consumer)!and!characterize formally!the!market!equilibrium. (ii) Explain!formally!why!we!have!an!inefficiency!in!the!market!equilibrium!with!an externality. (iii) Explain!formally!the!economic!idea!behind the!cap trade!system!for!CO2!emission!in Europe.

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5

6

Part&C&(30&points).!Please write!your!answer!in!the!space after!the!question. (i) Explain!what!characterizes private!goods,!public!goods,!club!goods!and common resources. Provide!one!example!of!each. (ii)

Derive!the!Samuelson!Rule!for!public!goods.

(iii) Use!a!formal!model!of!production!of!a!public!good!to!explain!why!too!little!of!it!will!be produced!in!a!private!market.

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