微观经济学复习提纲.doc

微观经济学复习提纲.doc

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OutlineforReviewingMicroeconomics（2013）

3.ShortAnswer（3×10，30points）

Chapter2　questionsforreview:

5,6

5.Explainwhyformanygoods,thelong-runpriceelasticityofsupplyislargerthanthe

short-runelasticity.

Thepriceelasticityofsupplyisthepercentagechangeinthequantitysupplieddividedbythepercentagechangeinprice.Intheshortrun,anincreaseinpriceinducesfirmstoproducemorebyusingtheirfacilitiesmorehoursperweek,payingworkerstoworkovertimeandhiringnewworkers.Nevertheless,thereisalimittohowmuchfirmscanproducebecausetheyfacecapacityconstraintsintheshortrun.Inthelongrun,however,firmscanexpandcapacitybybuildingnewplantsandhiringnewpermanentworkers.Also,newfirmscanenterthemarketandaddtheiroutputtototalsupply.

Therefore,thepriceelasticityofsupplyislargerinthelongrunthanintheshortrun.

6.Whydolong-runelasticitiesofdemanddifferfromshort-runelasticities?

Considertwo

goods:

papertowelsandtelevisions.Whichisadurablegood?

Wouldyouexpecttheprice

elasticityofdemandforpapertowelstobelargerintheshortrunorinthelongrun?

Why?

Whataboutthepriceelasticityofdemandfortelevisions?

Long-runandshort-runelasticitiesdifferbasedonhowrapidlyconsumersrespondto

pricechangesandhowmanysubstitutesareavailable.Ifthepriceofpapertowels,a

non-durablegood,weretoincrease,consumersmightreactonlyminimallyintheshort

run-becauseittakestimeforpeopletochangetheirconsumptionhabits.Inthelong

run,however,consumersmightlearntouseotherproductssuchasspongesorkitchen

towelsinsteadofpapertowels.Inthiscase,then,thepriceelasticitywouldbelargerin

thelongrunthanintheshortrun.Incontrast,thequantitydemandedofdurable

goods,suchastelevisions,mightchangedramaticallyintheshortrunfollowingaprice

change.Forexample,theinitialresultofapriceincreasefortelevisionswouldcause

consumerstodelaypurchasesbecausetheycouldkeepusingtheircurrentTVslonger.

Eventuallyconsumerswouldreplacetheirtelevisionsastheyworeoutorbecame

obsolete.Therefore,weexpectthedemandfordurablestobemoreelasticintheshort

runthaninthelongrun.

Chapter3　questionsforreview:

1,5；exercise:

2

1.Whatarethefourbasicassumptionsaboutindividualpreferences?

Explainthe

significanceormeaningofeach.

（1）Preferencesarecomplete:

thismeansthattheconsumerisabletocompareand

rankallpossiblebasketsofgoodsandservices.

（2）Preferencesaretransitive:

this

meansthatpreferencesareconsistent,inthatifbundleAispreferredtobundleB

andbundleBispreferredtobundleC,thenbundleAispreferredtobundleC.（3）

Moreispreferredtoless:

thismeansthatallgoodsaredesirable,andthatthe

consumeralwayspreferstohavemoreofagood.（4）Diminishingmarginalrateof

substitution:

thismeansthatindifferencecurvesareconvex,andthattheslopeof

theindifferencecurveincreases（becomeslessnegative）aswemovedownalongthe

curve.

Asaconsumermovesdownalongherindifferencecurvesheiswillingtogiveup

fewerunitsofthegoodontheverticalaxisinexchangeforonemoreunitofthegood

onthehorizontalaxis.

Thisassumptionalsomeansthatbalancedmarketbasketsaregenerallypreferredto

basketsthathavealotofonegoodandverylittleoftheothergood.

5.Whathappenstothemarginalrateofsubstitutionasyoumovealongaconvex

indifferencecurve?

Alinearindifferencecurve?

TheMRSmeasureshowmuchofagoodyouarewillingtogiveupinexchangefor

onemoreunitoftheothergood,keepingutilityconstant.TheMRSdiminishesalong

aconvexindifferencecurve.Thisoccursbecauseasyoumovedownalongthe

indifferencecurve,youarewillingtogiveuplessandlessofthegoodonthevertical

axisinexchangeforonemoreunitofthegoodonthehorizontalaxis.TheMRSis

alsothenegativeoftheslopeoftheindifferencecurve,whichdecreases（becomes

closertozero）asyoumovedownalongtheindifferencecurve.TheMRSisconstant

alongalinearindifferencecurvebecausetheslopedoesnotchange.Theconsumeris

alwayswillingtotradethesamenumberofunitsofonegoodinexchangeforthe

other.

Chapter4questionsforreview:

1,3,11

1.Explainthedifferencebetweeneachofthefollowingterms:

a.apriceconsumptioncurveandademandcurve

Thedifferencebetweenapriceconsumptioncurve（PCC）andademandcurveisthat

thePCCshowsthequantitiesoftwogoodsthataconsumerwillpurchaseastheprice

ofoneofthegoodschanges,whileademandcurveshowsthequantityofonegood

thataconsumerwillpurchaseasthepriceofthatgoodchanges.Thegraphofthe

PCCplotsthequantityofonegoodonthehorizontalaxisandthequantityofthe

othe