Advanced Micro I – Williams Final Edition

1. Give a brief answer to the following:

A person who loses his job through no fault of his own is also unemployed thereafter through no fault of his own.



2. The literature on the behavior of the firm poses it as a profit maximizer, a wealth maximizer, a growth maximizer, a sales maximizer, a sales maximizer subject to a prescribed profit rate.

Which of these do you use, why, and how do you manage to allow for these other assertions of firm behavior?



3. State whether the following is true or false and explain your response:

Existing firms in a cartelized industry prefer to be regulated by government.


4. Which of the following images is a graph of the standard intertemporal 2-period model?

Enter your answer as a single capitalized letter.







(2014 #1)

5. Is the following statement true or false? Explain your answer.

If you were a visitor in some underdeveloped country in which all lending and borrowing are effectively prohibited there would be no way to tell whether there were changes in the interest rate.

(#92, 2014 #2.c)


6. Is the following statement true, false, or uncertain? Explain.

A monopolist will never set price and quantity at a point where the demand is price-inelastic.

(2014 #3.a)


7. Atomistic markets are supposed to permit the achievement of Pareto optimality where externalities are absent.

Explain the meaning of this statement.

(#44, part 1)


8. Give a brief answer to the following:

Collusions have the natural tendency to break down.



9. True or false: Cost curves are monetized reciprocals of product curves? Explain.

(#76, #104, 2014 2.b)


10. Do externalities offer unambiguous proof of market inefficiency or is it possible for externalities to be consistent with market efficiency?*

*Hint: Professor Williams takes the mainstream view that a situation is efficient iff it is pareto-optimal.

(#44, part 2)