Miles Kim

12.05.15

Microeconomics Stern

Consumer Analysis
1. What is microeconomics about?
2. Explain goods/B.C.
3. What is the 1st step of optimal consumer choice?
4. What is the 2nd step of optimal consumer choice
5. Explain substitutes/complements and MRS.
6. Explain why convex curve implies Diminishing MRS?
7. What is the 3rd step of optimizing consumer choice?
8. Explain the effects of changes in income on consumer optimal
choice
9. Explain effects of change in prices on consumer optimal
choice.
10.
Explain direction of sub-effect to price change/how does
this show demand curve?
11.
What are income effects directions on inferior goods?
12.
Explain specific taxes and taxes on wealth.
13.
What is elasticity? (Categorize it as well)
14.
Explain income and cross-elasticity of demand.
15.
Explain consumer surplus.
Consumer Analysis w/ Uncertainty
1. Explain risk-averse person in receiving $10 with certainty and
$8, $12 with probability 0.5 each.
2. Explain the risk-loving consumer.
3. How do you define the certainty equivalent?
4. Suppose that a consumer has utility function U(w) = w1/2
a. What kind of risk-taker is he?
b. Suppose prob. (1/200) has $10,000 and (99/200) has
$1,000,000. How much is he willing to accept with
certainty in return for uncertain situation?
5. Explain how insurance markets works.
6. Consumer with U(w) = w1/2, wealth from 2 sources
a. 10,000 cash and hose worth $990,000
b. House burns with probability 0.005
c. How much consumer willing to pay for full insurance?
7. Explain actuarially fair in contracts.

Producer Analysis
1. Explain production function (MPL, APL)
2. Describe all MPL, APL, TPL relations
3. Explain cost of production
4. Explain returns to scale.
5. Explain cost terms: total, fixed, variable, average, marginal
6. What is marginal cost?
7. Explain the 3 types of cost functions.
8. Explain the relation between average and marginal cost curve.
9. Explain profit maximization and revenue.