SVKM'S NMIMS

SARLA ANIL MODI SCHOOL OF ECONOMICS

Academic Year: 2022-23

I ;:06::.#carsot::o°nfos=i:nTC:e:;0::mics) Year: I Semester: I

Batch: 2022-23 / 2021-22
Date: 23 November 2022
Time: 2.30 pin to 4.30 pin
Marks: 50
Duration: 2 (hrs)
No. of pages:±
EI FINAL EXAMINATION / RE-EXAMINATION

Instructions: Candidates should read carefully tl]e instructions printed on the question paper and

on the cover of the answer book, which is provided for their use.

I) In all, any 5 questions are to be attempted.

2) Each question carries lo marks.

3) Answer to each new question to be started on the fresh page.

4) Figures in brackets on the richt and in the body of the subquestion indicate marks for the sub-

- question or the part.

5) Assume suitable infomation if necessary.

I. Find the Walrasian demand function (3), indirect utility function (2), expenditure function (2),

and Hicksian demand function (3) for the following utility function.

U(#i, X2, X3) = Mfn {3Xi, X2, 4x3}

2. An employee is to be compensated for mandatory transfer. Currently employee salary is 80000

and prices faced by employee are (10, 10). Employee's utility function is U(x£, x2) = x£.2x9.8.

I/2.
 The prices faced by employee post transfer are ( 10, 20). Will the compensation of 10000 be

enough? Explain your answer.

3. Find the factor demand fimction (4), supply function (3), and profit function (3) for the following

production function. y = 10x9.L%2.2. Input prices are (wi, w2) and output price is p.

4. There are 5 identical firms with cost function c[(qi) = q(2 + A. Market demand is given by Od =

1000 -P. What is the condition on A such that no new fimi will choose to enter this market?

Explain your answer.

5. Answer the following sub-questions.

a. Find the monopoly price (2) and quantity (2) when markct demand is Od = 200 -4P

and firm has no fixed cost and margival cost function 0.250. (4)

b. Consider the following game where two individuals can choose to accompany each other

or go separately to two sporting events. The numbers are payoffi.

Player 2
Gymnastics Boring
Player I Gy-tics 3,2 2,2
Boxing i,1 2,3

What will be the mixed strategy Nash equilibrium for this game? Explain briefly. (6)

6. Two firms are in Stackelberg competition with each other. First firm is an incumbent firm. Their

cost functions are as follows. C[(qi) = 0.5q2 + 450 and C2(q2) = 50q2. Market demand is

given by P = 2000 - a. What will be the equilibrium price (4) and quntity (6)?

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